Passing fad Grade won't get poor watching ITV's decline

To understand what the future holds for ITV, you have to look far back in time, to when ITV was a struggling public service broadcaster with no future. That’s June, 2006.

Back then Simon Shaps was explaining that by dumping ITV’s public service commitments (see ya kids!), buying in top US programmes, and developing domestic programming that would become a kind of visual crack cocaine for 16-34 year old up-market professionals, ITV would be saved.

The presentation he gave to City types was about as sexy as a sausage-maker attempting to save his business by explaining to investors the improved ratio between mechanically recovered gristle, water and rehydrated husk. It was full of the language of incentives, return on investment, and a host of buzzy acronyms. It wasn’t pretty.

The one charming aspect of Shaps’s pitch was the assumption that ITV could retrieve its position by itself, commercially. Grade has been in non-profit TV long enough to know how dumb that idea is.

So how does ITV make money? Well, as Clint Eastwood declares at the beginning of Dirty Harry, to tell you the truth, in all this excitement I’ve kinda lost track myself. The answer is it sells advertising. And if you were Sir Peter Burt, outgoing chairman of ITV, you might ask yourself – “Do I feel lucky?” Well, do ya, punk? Sorry, Sir Peter. Here’s Sir Peter’s answer: “Our principal revenue is from television advertising, which is cyclical and combined with the fixed nature of television programme expenditure, makes free to air broadcasting a highly operationally geared business.”

Well, if you want an interesting answer you do have to be holding a Magnum .44, the most powerful handgun in the world, to someone’s temple.

But take a closer look at what Sir Peter says. Cyclical, he says. Kind of makes you think of the wheel of fortune, happy days are almost here again. Declining would be a more appropriate word, but it sounds so gloomy! What Sir Peter means is that even when you’re paying more for programmes, advertisers don’t necessarily have cash with which to pay you. And even if they did, there are ever more places to pass it around. So ITV finds itself spending more money to chase less money.

The ITV board hoped this simple commercial conundrum would be transformed by the arrival of Michael Grade. At the sight of his freshly-lit cohiba and shapely scarlet ankles, advertisers will find a few extra coins to chuck in ITV’s cap. Tiny Toon talent Ant and Dec will forego wage hikes just to share a cheroot with their new boss. Digital television will collapse, and the internet will prove to be what everyone always knew it would be – a passing fad.

The real passing fad is Grade himself. It took ITV from August to get him signed up, now brace yourself for a two-year long executive search party for ITV’s next CEO.

In the meantime, Grade’s first job will be to pension off the kindly old buffers who helped ease his way into Gray’s Inn Road. Sir George Russell, who held the ITV door open, will likely be first out of it. But booting old gentlemen off the board doesn’t add up to a strategy. While they’re being escorted sympathetically from the premises, the only thing stopping Grade from booting Shaps out is lining up a replacement for his director of television. Grade is so affable it’s hard to begrudge him a little financial windfall in his old age. His bonus scheme means he might get rich turning ITV around, but the reality is he won’t get poor watching its decline continue. In his conference call a week or so ago he announced that ITV had “to get the rest of the industry worried about what it’s doing”. Good to know he’s already ahead somewhere.

Comments
No comments to display

Leave a Reply

Your email address will not be published. Required fields are marked *

3 + 3 =

CLOSE
CLOSE