Political and regulatory factors in the operating environment have led to a number of changes to the Proposal in 2018/19. Brexit, and the near certainty that the UK will leave the umbrella of the AVMSD (Audiovisual Media Services directive) has resulted in the necessity of adding a base-of-operations within the remaining EU-27 Member States in addition to London; with Amsterdam, Dublin and Tallinn shortlisted, offering diverse and interesting options.
Continuing importance in the growth of OTT markets, in conjunction with the availability of fully integrated IP (Internet-Protocol) based Broadcast technologies has also led to increases in infrastructure budgets in order to ensure future sustainability without significant further capital investment being required inside the projected 5-year period. However, the costs involved in these increased considerations has been successfully introduced to the financial projections.
The ability to easily calculate alternate investment tiers; and options within each tier for elements incorporating Brokers Fees, Leases, and Credit Facilities remain project strengths as demonstrated within the proposal. Protection of the investment and generation of strong financial returns continue to be of key consideration.
The FAANG Stock Option has been developed in recognition of the potential for the project to offer a major Technology Company the opportunity to develop and enhance its in-house audiovisual content offerings.
The ‘Fake News’ Phenomenon
The event and proliferation of the ‘Fake News’ phenomenon, with the potential issue of the Network being wrongly labelled as a source of ‘Fake News’ by a biased political operative is seen as presenting a threat to reputation and subsequently audience and revenues, particularly in the first year of Transmission. Marketing power has been identified as a key factor in the Network’s ability to counter such unfavourable attention, and has resulted in a significant increase in both Marketing and Legal Budgets.
Construction & Pre-Launch Phase
The 2018/19 Proposal sees some changes and flexibility added to the Construction and Pre-Launch phase. The period is now represented as a flexible period from 15-24 months, with a budget allocation to cope with the maximum planned duration. While it is expected that this period may actually be in the region of 15 months, it was felt that it was appropriate to increase our caution and budget for a worse case scenario. This measure has been taken in view of: the great many potential uncertainties represented by Brexit and the potential for it to reflect on Licensing; and a changing regulatory environment in the United States. In addition, some additional time for Construction was advised by Design consultants as a result of increases to the specification and budgets for bureaus and studios.
A Conservative Approach
The proposals for establishing the Network, and either AVTN or NewsNet247 as a Channel have been prepared on the basis of conservative revenue targets that are considered wholly achievable, and present significant flexibility. The overall approach to all aspects of the project from infrastructure to budgets has been driven by a similarly conservative approach, while ensuring that all project elements and final capabilities are those of a Flagship News Network.