UK: Hard news, hard times at ITN. (2 of 3)

UK: Hard news, hard times at ITN. (2 of 3) - Bob Phillis, ITN's new chief executive, thinks that the company will be able to sort out its future funding by agreeing a three-tiered agreement. This would agree a price for the basic service, with extra mone

Last Updated: 31 Aug 2010

Bob Phillis, ITN's new chief executive, thinks that the company will be able to sort out its future funding by agreeing a three-tiered agreement. This would agree a price for the basic service, with extra money for extraordinary items (like travel and accommodation in the Gulf) and additional money for increased amounts of news coverage over and above the norm. In this way the Gulf war may prove a useful argument.

Financial problems were compounded by ITN's move to the site of The Sunday Times's former headquarters in Gray's Inn Road. The massive £45 million building was planned when property prices in London seemed set to rise forever, but the scheme was still dependent on the top five floors being let out for an annual £6 million. The collapse of the property sector in the capital has left ITN with a major headache.

Not surprisingly the company turned to obvious areas of cost cutting and revenue raising. Beginning three years ago it began slimming down its workforce. So far it has lost about 175 staff, which represents "the thick end of 20%" according to deputy chief executive Paul Mathews. At the same time productivity has improved dramatically, with news output having trebled. While ITN gamely maintains that there is still some more scope for cuts, it says that there is now precious little fat left and implicitly suggests that additional revenue will simply have to be found by the shareholders. If the level of foreign news keeps up it will turn again to its shareholders, says Mathews, adding that in that event: "I would be very surprised indeed if they didn't make more resources available. Once you agree on the level of quality, the price almost works itself out."

ITN's editor, Stewart Purvis, agrees. While the Gulf conflict has represented a huge drain on the organisation (in the week prior to hostilities breaking out he had to spend £200,000 arranging coverage), this is in part covered automatically. He points out that no matter where a report is filed from, it takes the place of another and was optimistic that the organisation could cope with the extra cost. Even so, this prediction was made before hostilities broke out, when the campaign was predicted to last only a matter of days, and his rival at British Sky Broadcasting, Sky News managing editor Lis Howell, is less sanguine. "There isn't a bottomless pit of money in any news organisation," she points out. "Anyone who says they are coping with the Gulf without sleepless nights is telling lies; it's amazing how far you can stretch yourself, but it hurts sometimes."

As a result of the general squeeze over the past year ITN has turned to additional revenue raisers. One such area has been its library services, which until now, maintains Mathews, were regarded simply as a programming resource. Now: "Without really trying, they generate £1 million a year," he says, and claims that this could easily be increased. In addition the firm is looking at opportunities for its "World News" on American cable channels. It is already available on the Nordic satellite that broadcasts to much of north and western Europe.

And there certainly is money to be made out of hard news, as the idiosyncratic Ted Turner has proved with his Cable News Network (CNN). When Turner founded the Atlanta-based 24-hour news service the pundits pronounced him mad, but a decade later Turner owns a worldwide network which is watched by millions. CNN has proved repeatedly, most recently with its remarkable Gulf coverage, that hard news can mean hard cash. Even ITN has had to turn to CNN for some footage of the Gulf, but that does not cause Phillis any problems. "I'm a great admirer - Turner's done a marvellous job," he says, adding that while the American network has received plaudits for its Gulf coverage, it is merely returning the coverage that ITN provided of the Conservative leadership contest.

As for emulating CNN, Phillis is more cautious: "Our terrestrial activity has to remain our core activity, but we have to explore new business opportunities." At present he is looking at renewing ITN's contract with Channel 4, linking into breakfast TV, negotiating for the new Channel 5 franchise and possibly supplying news programmes for cable and satellite stations abroad. If they last, Phillis believes that joint ventures may hold the answer and thinks that the new shareholders which will take stakes after the existing owners are forced to divest themselves of 51% of ITN could provide the answer.

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