Crozier draws up strategy to make ITV 'fit for purpose'

ITV's chief executive, Adam Crozier, and chairman, Archie Norman, have presented their vision of a network more in step with 21st-century broadcasting

ITV bosses yesterday fleshed out their five-year plans to dramatically overhaul everything from programming and online delivery to the broadcaster's very culture, pledging to tackle decade-long issues and spark the group's "rusty machinery" into action.

Following a root and branch review of the entire operation, chairman Archie Norman and chief executive Adam Crozier used yesterday's half-year results to unveil their so-called Transformational Plan, as they seek to make the company "fit for purpose". The strategy includes boosting revenues from existing broadcast business, driving new revenue streams, developing its content arm and building a strong international content business.

Mr Norman, the former head of Asda, who joined the broadcaster at the turn of the year, said: "We want and need to be Europe's fastest changing media company."

Mr Crozier, who arrived from Royal Mail several months later, said the transformation plan would help shape "a lean business that creates world class content executed over multiple platforms, which can be sold globally". The group also took a swipe at previous management, saying that 90 per cent of underperformance over the past 10 years had been self-inflicted.

"For the past decade ITV has not faced up to the challenges presented by the rise of internet-based platforms, the continuing growth of pay TV and subscription services and the globalisation of content," Mr Crozier said.

Lorna Tilbian, analyst at Numis Securities, said the new management team had "accurately assessed the 'organisational ineffectiveness' which has blighted ITV over the past decade and have laid out a coherent strategy on how to change this."

Mr Crozier and Mr Norman said it was in a good position to introduce a new strategy, as market conditions had improved in the first half. ITV posted a pre-tax profit of £97m for the first six months of this year following losses of £105m a year earlier. This growth was driven by a rebounding advertising market, with ITV ad revenues 18 per cent higher year-on-year, outpacing its rivals. Mr Crozier said the group had been particularly strong in June because of a successful World Cup. The group also revealed it had reduced net debt by £175m to £437m following strong operational cashflow.

Yet, Mr Crozier was determined not to let the group's return to form derail its restructuring plan. He said: "The good financial performance has enabled us to reduce our debt significantly, but does not disguise the underlying challenges we face. We are under no illusion that ITV needs to change substantially."

He said the clues to the issues facing ITV could be found in its interim results, with certain trends "pointing to long term issues". The most predominant was the dependence on TV advertising "in a stagnant market". This comes as ITV continues to lose audience share with the fragmentation of the market. In the first half the share of TV viewers watching ITV1 reduced 5 per cent. Mr Crozier said: "I've developed a very clear idea and view of the realities of the challenges facing ITV. I believe it is time for it to face up to those issues. Most have been around for 10 years, but they are now gathering pace." Currently, 74 per cent of revenues come from TV advertising. Mr Crozier intends to bring that down to 50 per cent. Ms Tilbian said the strategy "is a stretching target and therefore rate the chances of the new management team being able to deliver this as evenly balanced".

One of the core steps in diversifying its revenues is a move to put some of its channels on pay TV, which it announced yesterday. ITV had its fingers burnt when it previously tried to launch a pay TV operation, initially as ONdigital and rebranded as ITV Digital in 2001. Its latest strategy, announced yesterday, "is completely different," according to Toby Syfret of Enders Analysis. Instead of launching a pay platform competing with BSkyB, it has signed a deal with the satellite group to put the high definition versions of its digital channels ITV2, ITV3 and ITV4 on its platform. Mr Crozier added: "Pay television has seen continual growth over the last decade and this deal is a great example of how a new, subscription-based launch can complement ITV's existing free-to-air channels." They will be bundled with Sky's channels and ITV will receive a carriage fee.

Mr Crozier revealed that this was just a "toe in the water" of pay TV content, adding "we need to do more on pay". He said: "The numbers add up, this will be incrementally profit generating from day one."

The pay TV market is worth about £6bn, "and ITV's share is precisely zero," Mr Crozier said. He revealed that the deal was not made on an exclusive basis and left the door open for talks with other pay TV providers, including Virgin Media.

Another crucial area for the group to develop revenues is online. ITV.com currently brings in just 1 per cent of revenues and video views on ITV.com fell 14 per cent in the first half of 2010. "Some of that is the Subo effect," Mr Crozier said over the previous year's interest in the Britain's Got Talent star, but he added: "We are still punching below our weight". He continued: "We were weak on technology with no clear platform strategy," but ITV is now looking at strategies including micropayments in an attempt to monetise its online content. "We need to transform ITV.com. The viewer experience is not as good as it should be," Mr Crozier said.

ITV yesterday also announced plans for a £75m fund to invest online as well as its digital channels and content for the next three years. The sum is not part of its network programming budget, which is set at about £800m. ITV is keen to reinvigorate its programming and turn around the 14 per cent drop in revenues at ITV Studios. It has high hopes for dramas Downton Abbey and Bouquet of Barbed Wire, as well as the 50th anniversary of Coronation Street and Champions League football. Yet ITV's biggest brands behind Coronation Street – Emmerdale and I'm A Celebrity... – "are ageing" the group admits. ITV Studios share of output on its flagship channel makes up 47 per cent, down from 65 per cent just five years ago. "The creative process hasn't been working as well as it should be," Mr Crozier said. "There are no quick fixes. It will take time." ITV has brought in Kevin Lygo from Channel 4 as managing director of ITV Studios to reinvigorate the content. ITV is also looking to build a "strong international content business," the chief executive said.

It plans to expand from seven countries to 17 in the next five years. "We're very clear on the challenge, now is the time to face up to it. We have to get into the growth markets," Mr Crozier said.

Most analysts have backed the plans drawn up by management and Mr Norman added that with the main shareholders, "the reaction has been almost invariably enthusiastic".

Mr Syfret said: "They are targeting the right areas and are taking a clear, sensible approach, but they still have it all to prove."

News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Bruce, left, with Cream bandmates Ginger Rogers, centre, and Eric Clapton in 1967
people
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker