Northern & Shell is preparing a radical payment system for Channel 5 that will see indies work for it on a performance-related basis.

Suppliers that agree to sign deals using the new model could receive a bonus if shows rate well, but have their payment reduced if they underperform.

Speaking publicly about C5 for the first time since its acquisition, Northern & Shell director Stan Myerson said the broadcaster was keen to embrace new models but would not tolerate failure.

“We won’t be afraid to take creative risks of a sort that the previous owner appeared reluctant to sanction, but we will also be ruthless in replacing underperforming shows with better material,” he added.

One indie managing director said it was vital to be open to flexible models. “The way the business works is changing and no one is compelled to work with C5 if they don’t like their terms. They inherited a business that was losing a bucket-load of money and don’t want to continue to do that.”

But a rival boss said there was little space to drive down costs further. “We’re not making a fortune from C5. If they think they’re being ripped off, then they’re in a dream world. There really isn’t any wriggle room.”

Last week, Shine hired lawyer Reed Smith to help it recover almost £1m owed by C5 for Don’t Stop Believing, with Emma Bunton, which failed to perform as well as anticipated.

Myerson said that C5 has already spent about £20m promoting shows such as The Gadget Show and The Hotel Inspector via its Daily Express and Daily Star newspapers and OK! magazine, and plans to spend £300m on the programme budget over each of the next five years.

He said: “Make no mistake, we are not here to mess about. This is no vanity acquisition. “We are fiercely determined to make C5 work and be profitable, and we will invest to achieve precisely that.”

Stars including Barbara Windsor have been brought on board, with Vanessa Feltz fronting a mid-morning show to air after daily phone-in The Wright Stuff.

Myerson said the aim was to appeal to a younger audience and offer advertisers cross-media access.

Comment: Desmond must keep suppliers on side

BY Lisa Campbell

The key to success for any broadcaster is a healthy relationship with suppliers. As incoming BBC1 controller Danny Cohen once remarked, it’s not about cherry-picking the best ideas, but about “scrabbling around for enough good things to broadcast. It’s really, really hard”.

So the last thing you want to generate is a reputation for an aggressive stance towards suppliers. But in his short spell owning Channel 5, that’s exactly what Richard Desmond has managed to do.

Shine is suing the broadcaster for non-payment over Don’t Stop Believing while offering support to smaller indies who say their survival is threatened as they await payment.

Desmond counters that he does not want anyone to go bust - but it’s hardly conducive to a prosperous business when suppliers have to plead for payment. Neither is it a way to incentivise creative people to do their best work.

Desmond can alter C5’s business model, but he needs to discuss changes, not simply impose them, and he has a duty to fulfil existing contracts.

It’s only by having suppliers on board that he will be able to produce 360 content across his brands. As WPP boss Martin Sorrell said at a C5 dinner this week, there should be a “symbiotic relationship” between C5 and production companies. “The opportunities are immense - I wouldn’t want either side to blow it.”

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