ITV's new chairman pledges overhaul

Search for new chief executive is top of the list of priorities for Archie Norman

Archie Norman has made his first declaration of intent after taking over as chairman of ITV, calling for an overhaul of the broadcaster and warning that "'no change' is not an option".

Mr Norman sent a memo to the broadcaster's staff on Tuesday, a day after moving into his new office in the ITV building on London's South Bank, "to outline how we intend to work as a leadership team in the months ahead".

He didn't mince words, warning that ITV "cannot remain as it is". Mr Norman warned staff: "'No change' is not an option. We need to be a very different business in three years' time." The new management, he added, was "now embarking on a programme to accelerate the transformation of ITV". As part of the move, Mr Norman unveiled a strategic review to start this month.

Mr Norman's first task is to find a new chief executive for ITV. A troubled search process to find a replacement for executive chairman Michael Grade, whose role was split into two, saw talks in September with favoured candidate Tony Ball, the former chief executive of BSkyB, collapse at the 11th hour.

Paul Richards, an analyst at Numis Securities, said: "Archie Norman can't really start looking at significant changes to the company until ITV has appointed a chief executive. Once that has been done, they can get on with the strategic review."

Mr Norman is understood to be "getting on with it" but is anxious not to play the process out in public. John Cresswell remains the acting chief executive, although he has ruled himself out of the running for the permanent position, and will quit the group when a successor is found.

The broadcaster surprised the market when it appointed Mr Norman in November, though the move was slightly overshadowed by the appointment of Marc Bolland as the incoming chief executive of Marks & Spencer on the same day. Mr Norman, a former Tory MP and chief executive of Asda, was appointed by ITV after other high-profile candidates including former Reed Elsevier chief executive Sir Crispin Davis and airline operator BMI's former chairman Sir Michael Bishop ruled themselves out of the running.

Mr Richards said the new chairman has "an awful lot of 'to dos' in his in-tray" even after he appoints a new CEO. "ITV is a producer-broadcaster, and there is some speculation it could sell off its production business or establish a joint venture with a third party."

Another issue that has been floated by analysts is the possibility of changing the model away from a solely free-to-air business. "ITV may look at moving to a hybrid structure," Mr Richards said. "It could keep the main channel free, and possibly move ITV2, 3 and 4 on to the BSkyB platform."

The issue of selling non-core assets is likely to be back on the agenda. ITV failed to sell its SDN digital arm last year but "could well try again" as conditions improve, Mr Richards said.

ITV ended the year on a high as Mr Cresswell revealed that advertising revenues grew for the first time in 18 months, bolstered by shows including X Factor. Mr Norman noted the upturn but cautioned: "We are not out of the woods yet and 2010 looks like another difficult year."

The rise in advertising revenues and measures to curb costs mean that one move is probably not on the agenda. "About half a year ago, it was a racing certainty that if a chief executive had been appointed, he would have to raise money," Mr Richards said.

"Now, following an upturn in advertising and good work from ITV's finance department, they probably aren't going to have to."

No change is not an option: Archie Norman's email to ITV staff

Dear colleague,

Having arrived at the beginning of the month as chairman I wanted to say "hello" and also outline how we intend to work as a leadership team in the months ahead.

I will be based in our open plan office on the 17th floor of the ITV building along with my PA, Barbara Kyriakou. John Cresswell is acting as chief executive as has already been announced, and will continue to provide executive leadership for the business. We have a good team in place and will be pushing ahead with our plans for the business without pause in the months ahead. At board level we have already made changes and enter the new year with a streamlined, high calibre and dedicated board.

We ended 2009 on a bit of a high with some great programming successes. I think it is important that we all recognise that we are not out of the woods yet and 2010 looks like another difficult year. GMTV has now fully joined the family and we need to ensure we keep what is special about their operation, and support the team to make it even better. More broadly we need to continue to improve our content whilst living within our means on costs. The last few months have shown that when we produce great entertainment we can outperform all the competition.

At the same time we know that ITV cannot remain as it is. "No change" is not an option. We need to be a very different business in three years' time. Our objective is to recreate the business so it can not just survive but prosper in the new media world. Therefore, we are now embarking on a programme to accelerate the transformation of ITV. As part of this I will, with the executive team, be launching a strategy review this month to define the journey ahead. We will build on our strengths, the ITV brand, great content, innovation and creativity to become once again a growth business. You will hear more about this in the months to come.

I am keen to get to know you all better and to hear your thoughts on how we are doing and what we can do better. I will try to meet as many colleagues as possible but if you have an idea you want to share please email me or drop me a line.

I look forward to hearing from you!

Happy New Year!

Archie

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