Damn those dastardly bankers. But for the credit crunch, Michael Grade's turnaround strategy for ITV would be on course, if not ahead of schedule. As it is, he's veering badly, with targets for growth in both content and online revenues knocked back and TV advertising spend falling like a stone. To make matters worse, the credit rating agencies are about to reduce the debt to junk once more, further adding to costs. The dividend is, meanwhile, being halved.
There are some positives. Advertising looks dire but it's a bit better than the market as a whole, while across the family of ITV channels, the company has begun the process of reversing a decade-long erosion in market share. There is what looks to be an audience-pulling schedule to keep that trend moving in the right direction for the next 12 months, including lots of live football. Not such good news for the staff but presumably positive for the shareholders, Mr Grade is also cutting a further £35m off costs.
All the same, none of it is capable of compensating for the state of the market, with net advertising revenue expected to be down a stomach-churning 20 per cent in September. The size of the fall is distorted by comparison with a buoyant September last year, when male-orientated motor and finance advertising was swollen by the rugby world cup. Yet at 5-8 per cent, the expected fall for the final quarter as a whole is still quite bad enough, and nobody is predicting it will get better next year.
Somewhat depressingly, Mr Grade is being forced to fall back on the possibility of regulatory concession – the strategy of his predecessor, Charles Allen – to offer shareholders hope of bottom-line protection.
Public service broadcasting (PSB) obligations, which Mr Grade reckons cost him around £200m a year, are already the subject of an apparently not unsympathetic review by Ofcom, the communications regulator. If he doesn't get satisfaction from Ofcom, then he could always hand the licences back and take his chances as a wholly digital offering free of PSB constraints. Yet it is not Mr Grade's preferred approach.
Some 90 per cent of terrestrial broadcasting is already digital but the analogue licences still get ITV favoured positioning on the electronic programme guide. Rather than giving the licences back, Mr Grade hopes instead to negotiate a compromise, where public and shareholder interests become more alligned.
Most of us would think it highly undesirable for broadcast news to be left entirely to a Murdoch/BBC duopoly, and indeed ITV would lose its credibility as a third force in broadcast TV if it were to abandon international, national and regional news.
ITV hopes a separate review by the Office of Fair Trading will bring further relief by scrapping or modifying "contract rights renewal", which links what can be charged for advertising to audience share. Both these concessions look reasonable in current market conditions. ITV is already operating in what is effectively a post-analogue world. If it is to maintain its current level of investment in programming, it needs to be freed from a regulatory burden designed for the world as it was nearly ten years ago.
None of this is much consolation to investors. The shares have been a dog of a performer and are now worth even less than they were at the bottom of the last downturn. They've also proved a completely misjudged investment for BSkyB, even accepting that Sky's main purpose in buying a stake was to thwart a possibly disadvantageous merger with Virgin Media.
Mr Grade insists he would have been OK but for the downturn. Who knows? Sir Stuart Rose at Marks & Spencer says the same thing. Certainly, it makes a convenient excuse. Still, the credit crunch might at least make good fodder for one of ITV's three-part thrillers. Excuse the cliche, but you really couldn't have made it up. The banking crisis makes some of ITV's plot lines seem positively unimaginative by comparison.Reuse content