INSIDE OUT - Those panjandrums of British commercial TV, Michael Green and Charles Allen, managed to lose a billion in a venture doomed from the start.

by ANDREW NEIL, publisher of The Business and The Scotsman
Last Updated: 31 Aug 2010

Those panjandrums of British commercial TV, Michael Green and Charles Allen, managed to lose a billion in a venture doomed from the start.

If you had asked me when I launched Sky TV in 1989 which of the established broadcasters would suffer most from the success of multi-channel TV, I would have said the BBC: uncommercial, bureaucratic, slow to change, with a public-service remit that inhibited its ability to compete with the huge increase in viewer choice. But I was wrong: the BBC has coped amazingly well with the challenge. The biggest casualty has been ITV, Britain's largest commercial channel, supposedly run by hard-headed executives who thrive on competition.

The demise of ITV is one of the great British corporate meltdowns of our time. At the Edinburgh television festival in August, David Elstein, one of the more original minds in British TV, blamed ITV's bosses for presiding over a 'decade of profound mismanagement'.

The worst example of this mismanagement was ITV Digital, the brainchild of Michael Green, chairman of Carlton, and Charles Allen, his opposite number at Granada. These panjandrums of British commercial TV managed to lose more than pounds 1 billion in a venture that was doomed from the start.

Launched a decade after BSkyB, with inferior technology, unreliable reception and less channel choice, it nevertheless had the temerity to go head-to-head with Rupert Murdoch's Sky - a supreme folly from which it never recovered.

As the losses mounted, Green complained that Murdoch had behaved unfairly by giving away Sky digital boxes just as ITV Digital was trying to establish a modest market share. But there was never any doubt that Murdoch would do this: we did the same with Sky dishes in the aftermath of the launch 13 years ago to see off British Satellite Broadcasting. Green and Allen's failure to plan for a similar response to ITV Digital underlines just how out of their depth they were.

In a desperate bid to win subscribers, ITV Digital paid pounds 315 million for the rights to the Football League. But BSkyB already had the rights to the more glamorous Premier Division and there was no way this second-string football was ever going to compete. Far from being its saviour, this high-priced contract brought ITV Digital to its knees, forcing it into bankruptcy early this summer.

ITV's digital debacle has taken its toll on Granada and Carlton, the broadcasters that dominate ITV. From a high of almost pounds 7 only two years ago, Granada's shares are now trading at under pounds 1; Carlton has plunged from almost pounds 6 to around pounds 1.50. The supposed giants of British commercial broadcasting have been reduced to pygmies compared with their American and European equivalents.

The true cost of ITV Digital is far more than the pounds 1 billion lost by Granada and Carlton shareholders. Its ignominious demise has further undermined the ITV brand - perhaps fatally - just when it was already losing its grip on British broadcasting.

In the three-channel universe of 1982, ITV was by far the most popular of Britain's channels, with more than 40% of the market and a viewing share lead of 12 percentage points over BBC1. In the first half of this year, its viewing share was down to a miserable 23%, well below BBC1's 26.4% and the first time ITV has trailed BBC1.

It's particularly bad timing for ITV, as it coincides with the worst crunch in advertising revenues in a generation. It is a measure of the appalling quality of ITV management that its response to the alarming loss of audience and advertising was to announce a fifth weekly episode of Coronation Street, which itself has lost two million viewers in the past year. The blunt truth is that the people who run ITV have squandered the best brand name in British commercial television (while imposing much collateral damage on ITN in the process). They knew how to make money when ITV was a federation of 15 cosy regional monopolies. But, despite the consolidation of ITV into two big companies, they cannot hack it in today's fiercely competitive multi-channel age.

If ITV were a US network, those who have presided over its demise would have been fired long ago. Nobody at the top has. The hapless Stuart Prebble, who ran ITV Digital in its dying days, fell on his sword. David Liddiment, ITV's director of programmes, who scheduled endless bland sitcoms and formulaic dramas, and Steve Morrison, Granada's CEO, have been allowed to resign at their own leisurely pace.

Green and Allen are still there, squabbling over how to merge their companies into a single ITV entity, a first step to any revival of the network.

They hope to save their skins by pinching Channel 5's Dawn Airey to revitalize the ITV schedule with the sort of intelligent entertainment produced by American TV - think Friends, Frasier, Sopranos, 24 - but which became extinct on ITV under Liddiment.

But Airey cannot turn round ITV on her own. That will only happen - if at all - when ITV becomes a single entity, with new, probably American ownership and the sign on the boardroom door says: 'Under New Management'.

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