Media: Crisis? What crisis? All's well with ITV: Everyone says commercial television is in turmoil. The chairman of its watchdog body gives Michael Leapman a different view

WHEN Sir George Russell says: 'Now this is going to sound awfully smug . . .', you lean forward and take notice, for the chairman of the Independent Television Commission, ITV's regulatory body, is not known for complacency. Far from it; the quiet Northumbrian is a worrier, a bit of a fusspot, chivvying people until they see - and eventually do - things his way.

Moreover, if you believe all you read in the papers, he is talking about an industry in a state of turmoil.

Six months since they assumed their new franchises, the ITV companies are in conflict about the rules on takeovers. There have been complaints that some are failing to fulfil promises they made in their bids.

There is pressure to move News at Ten to maximise revenue (see Talk of the Trade). Analysts predict that cuts affecting programme quality are unavoidable if the companies are to meet their annual payments to the Treasury while being squeezed by increased competition for advertising.

Yet here was Sir George saying: 'Now this is going to sound awfully smug, but I have been very surprised by the way commercial TV has more than held its own in the last 18 months. In the past, every time we've had a franchise round we've always lost ratings. This time we haven't'

Nor has he detected any move downmarket, which was widely predicted when the new franchise bidding system was put in place.

'We've been surprised at the strength of one or two of the strands, like current affairs and documentaries . . .There's been all this very dramatic change, with the biggest company of all (Thames) moving out. I expected to see some companies struggling, but the move from the old to the new has, in many respects, barely been noticed, and that is good news.'

We spoke last week in his large office at the ITC's old headquarters in Knightsbridge, bare of fixtures and accoutrements except for a desk, a table and a few chairs. All his other things were packed in cases, ready for the imminent move to more modest headquarters in Foley Street, in the garment district of London's West End.

The previous day, surplus goods and effects accumulated in the 32 years that the ITC and its predecessor bodies were based in Knightsbridge had been auctioned to staff at keen prices. It was a lot less fraught than the auction there two years ago, when dozens of hopefuls applied for the 16 ITV franchises on offer.

The 1991 auction shaped today's ITV. If Sir George is right in thinking it is all going well so far, the credit is his. It was he who lobbied to ensure that the 1990 Broadcasting Act allowed him discretion to reject the highest cash bid under certain conditions. In 10 cases, the highest bidder was not awarded the franchise.

'We were given the right to take certain very rough decisions,' he says. 'Had we not been allowed to look at quality, and make a financial assessment, you would have seen a totally different commercial television system, which would have been drained very rapidly. Granada and London Weekend wouldn't still have been in business.

'The decisions we took have allowed the system to reform and not destroy itself.'

In that case, why the present fuss about mergers? Why are the larger regional companies pressing the Government to change the rules that bar them from linking up with each other? Why are some smaller ones pressing for an extension of the moratorium on hostile takeovers, due to expire at the end of this year?

Sir George wants the moratorium extended, too. He believes that in the long run the logical pattern of commercial television could be just five large companies, but as a businessman - he is chairman of Marley Tiles - he wants any restructuring to be carried out in stable conditions. With the future of the BBC still being decided by the Government, such conditions do not yet exist.

'If the BBC takes advertising or sponsorship, ITV shares will go down; if not, they will go up. I would also prefer to see commercial television learning to run a network centre and to deal with each other without new players turning up . . . When you've got to work together in a federal system, to have one or two expecting to be picked off by the others makes it pretty damned difficult.'

If larger groupings are formed, he will insist that they fulfil existing regional obligations. The recent takeover of Tyne-Tees by Yorkshire (mutually agreed takeovers are allowed, even in the moratorium period) sets a precedent.

'We reminded Yorkshire that Tyne-Tees was expected to honour its contractual obligations. The drift into a single region was checked,' he says.

The most serious challenge to the new franchises came when the Labour Party complained that Granada, in cutting costs, was breaking its contractual programming commitments.

'We investigated, and found to our surprise that they were actually making more programmes than they had for several years. Granada is still holding strongly and making strong offerings to the network.' As for the Commission itself, it is moving to humbler premises because its functions have been reduced by the 1990 Act. It no longer bears legal responsibility for the programmes ITV puts out - that has beEen devolved to the companies themselves. The ITC continues only THER write erroras a regulator.

'I've always regarded the separation of the broadcaster from the regulator as being healthy,' Sir George says. 'It should happen at the BBC, too, for its own health.'

He has a few worries for the future. Farming out 25 per cent of production to independents, as the legislation requires, weakens the production base of the ITV companies and reduces job security in the whole industry.

His other concern is Michael Grade's success in increasing Channel 4's ratings without weakening its commitment to minority programming. Channel 4 now sells its own advertising, where previously it was sold by the ITV companies. 'Once it gets much above 10 per cent audience share, it starts taking revenue from ITV.' (Latest Barb ratings give it 11.5 per cent.)

By the time his term of office ends in 18 months, Sir George will have presided over the most turbulent six years in ITV's history: two years negotiating over the Broadcasting Bill, two years running the franchise auction and two years seeing the new system settling in.

What then? He will be only 59 (12 years younger than Marmaduke Hussey, chairman of the BBC), and is easily the most respected senior figure in television. The industry would be sorry to see him go. If the Government accepts his argument for a single regulatory body, who better to run it?

(Photograph omitted)