ITV results are bad news, but what are they going to do about it?

ITV results are bad news, but what are they going to do about it?

Well it seems blame the regulator, the economic conditions, the growth in digital TV and the internet.

Have blamed everything it seems tat they are going to cut cost and look at revenue generation.

Cutting costs is what Charles Allan did for several years. Outside observers could say that this drove out creativity, drove away viewers and eventually led to where they are today.

Carolyn Fairbairn (ITV’s group strategy director) says that the TV advertising model is broken. That advertising rates in the UK are the lowest in Europe. She was speaking at the London Business School (3rd March 09) in a debate titled “Future of UK PSB Television”

Is the advertising model broken? There are lots of commercially funded TV channels in the UK that seem to be doing OK. Sure its harder but ITV has failed to adapt so from their perspective it is broken.

Who cares? No one really ITV is not delivering the audiances that the advertisers want or the programming the viewers want. Michael Grade, in an interview today (BBC Radio 4) when questioned about his strategy of using content creativity, to grow the business, said, that ITV were creating content for which they could generate a return on investment for their shareholders. The interviewer queried, “So what about the viewers?” To which Micheal Grade had a long pause (almost “I hadn’t thought about that” moment) before claiming that the content was attracting audience. NOT ENOUGH OF THE RIGHT ONES MICHAEL.

The denial of what is going on is what happens in many industries where the dynamics change and the incumbent/dominant players are unable/willing to make the changes necessary. Example the British Motorcycle industry when the Japanese arrived. The mechanical digger industry when hydraulics came along and the computer industry as generic PC’s took over from mainframes and narrow word processing systems.

ITV strategy must be to get cheaper home grown talent and innovative content. Don’t pay through the nose for Ant and Dec for Simon Cowell.

Use ITV 3 and 4 - try an Opendoor slot for independent producers, armature groups and University media departments (maybe even consumers) to showcase programmes. A talent slot rather than a talent show. Themed so that it isn’t random what consumers will see – Comedy, Drama, Music etc This may not be right but try something other than blaming everything else.

Put your viewers first and if they come back so will the advertisers.

The Future of Channel 4.

The Future of Channel 4.

Call me simple, but I just don’t get it.
Channel 4 in the UK is predicted to be insolvent/bankrupt or otherwise financial unable to continue within the next few years.
There has been some talk of merging it with one of the other UK broadcasters – the benefit would be synergies could be realised that reduced the cost.
Ch4 is owned by the government but is funded solely through advertising. It has a Public Service obligation that has meant it has not adopted the “me too” (Strictly Come Dancing –BBC begat Dancing On Ice) strategy of ITV or stick with tried and trusted popular formats (I’m a celebrity…) also a strategy of ITV.
Ch4 has a very credible record in producing innovative, challenging programming over its life. Not having to provide a return to shareholders should mean that more of its revenues can go into continuing this innovation. Merging with a commercial broadcaster ITV or Ch5 may give operational cost synergies but it will also add the cost of servicing shareholders.
When the Chairman of Ch4 says he favours privatisation over merger that doesn’t seem to make sense either – there are not operational cost synergies but the burden of servicing shareholders would arrive. This will inevitably be followed by the finance people that understand nothing about creativity (as demonstrated in ITV (Charles Alan) and simply drive cost out and stick to tried and trusted formats that eventually become stayed and boring.
Privatising Ch4 could mean that Luke Johnson (the Chairman) gets some kudos and a pay rise, for chairing a private company. This is the only driver I can see for suggesting it. I can’t see that if Ch4 is destined to become financially insolvent, as it is,why (unless there are costs that they already know can be cut) its future would be any more secure if privatised
While there might be some other genuine reason I am sceptical. Following the £600k p.a. pension payments to the failed head of RBS I am fed up with individuals benefiting from stripping the country’s assets and cultural heritage or screwing the tax payer.
Here is a thought…maybe not good for Ch4, but BT is struggling with BT Vision and could derive some synergies from acquiring Ch4. It would also be less challenging to maintaining the plurality of UK broadcasters.