Behind the Spin: ITV

THE DILEMMA

by
Last Updated: 09 Oct 2013

Even Coronation Street's scriptwriters couldn't have conjured up the drama at ITV this year. One of TV's most turbulent years, 2007 brought shame on the UK's largest commercial broadcaster for the way it exploited its premium-rate phone-ins. An Ofcom inquiry into practices at GMTV (in which ITV has a 75% stake) found it guilty of 'widespread and systematic deception of millions of viewers', and a fraud investigation may follow. Chairman Michael Grade not only has to pull ITV's reputation out of the mud; he needs to ensure that ad revenues grow. Google's UK turnover now outstrips ITV1's - evidence that the broadcaster must change if it is to compete in the brave new media world.

THE SPIN

New director of global content Dawn Airey was quick to point out that ITV was not alone in its deceptions. 'Between us,' she said, 'the BBC, Channel 4 and ITV have had what you could politely call an annus horribilis.' After joining ITV in January, Grade commissioned an internal investigation from Deloitte into more than 60 programmes produced in-house. It found 'serious editorial issues' and concluded that ITV had conned viewers out of £7.8m. Yet, unlike the BBC, Grade refused to dismiss any employees. A package of refunds, charity donations and remedies will cost ITV £18m. Grade's actions did little to quell the public outrage stirred up by Ofcom's earlier investigation into GMTV, which cost the broadcaster a £2m fine. He insists that new procedures will improve standards.

THE STRAIGHT TALK

It will take time to restore viewers' faith in ITV - a string of scandals does serious brand damage, although perhaps they already had lower expectations of the commercial broadcaster. ITV is fumbling towards a more commercial future, and with ad revenues switching from broadcast to broadband, ITV must commercialise its top brands without jeopardising its relationship with viewers. And then there's BSkyB's 17.9% 'spoiler' stake in the broadcaster, judged to be anti-competitive by the Competition Commission in October. ITV's shares hit an all-time low last month when it said it wanted BSkyB to sell up.

THE VERDICT

Takeover bids continue to be whispered about. The most recent was from Apax Partners, but Credit Suisse analysts quickly put paid to that idea, saying that ITV was now too big and too expensive for a private-equity firm. Grade has his own remedy: 'The effective solution is to change the culture, to change the systems, to understand the importance of trust.'

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