Brainfood: Behind the spin

The dilemma

by
Last Updated: 31 Aug 2010

ITV, created from the merger of Granada/ Carlton in 2004, is led by chief executive Charles Allen. He pleased the City by delivering a 57% rise in profits in the new plc's inaugural results, but the UK's biggest commercial broadcaster has since picked up a little interference. ITV lost its broadcasting rights to Premiership football highlights, production staff walked out over pay, second-quarter results were disappointing and rumours of a takeover bid persist. ITV1's shrinking audience share also worries critics mindful of declining UK advertising revenues. Add to this a couple of programming flops - including the £15 million Celebrity Love Island - and speculation about the broadcaster's general health continues.

THE SPIN

Mick Desmond, CEO of the ITV Broadcasting division, says recent criticism has been unfair. He told the FT: 'We've had two to three key programmes that haven't worked, but as a network, we have to take risks.' The company mollified shareholders by revealing that underlying revenues for the six months to June for ITV1, ITV2 and ITV3 are 'broadly in line' with last year, and with its autumn schedule, which includes a new run of ratings winner I'm a Celebrity ... Although ITV1's audience share is decreasing, digital channels ITV2 and ITV3 continue to draw viewers. ITV recently invested £134 million in Freeview to secure its future digital capacity.

THE STRAIGHT TALK

Media buyers have been unhappy with ITV's programming judgment, particularly with the return of Channel 4's perennial Big Brother. One told the FT that the latest series of BB 'will wreak havoc on ITV'. ITV must also be keeping a close eye on Channel 4's digital incarnation E4, which recently rolled out on Freeview. But the more dangerous long-term threat could come from BSkyB's Sky Plus on-demand TV. Because Sky Plus allows viewers to skip ads, media commentators are worried that when it reaches critical mass, ad breaks will cease to work, putting into jeopardy the current commercial TV business model.

THE VERDICT

Although ITV got a kicking over its recent celebrity offerings, it's probably just a hiccup in the year's programming. Moreover, Ofcom is expected to cut ITV's licence fee by the end of this year, saving the broadcaster up to £100 million. But the long-term picture isn't so rosy. Although ITV made a fair debut, it is still early days. If the broadcaster's worse-case scenario happens - the demise of the TV ad - what exactly will Allen do then?

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