Ray Snoddy On Broadcasting

Headhunters have a tough job to recruit a saviour for declining ITV

As Charles Allen loads his pantechnicon with used £50 notes before saying goodbye as ITV chief executive, one thing is clear: nothing has changed and no problem has been solved as a result of his assisted decision to depart and avoid more bullets.

He has had a good 15-year run in commercial television from his early days as "assistant caterer" to Sir Gerry Robinson at Granada and has done many of the right things. The "courageous" successor will find him or herself dealing with very similar intractable problems. They will also continue to implement Allen's perfectly rational strategy of diversifying away from near total reliance on ITV1 towards multi-channel and increased online revenue.

As headhunters sharpen their pencils for one of their toughest assignments there is one horrendous problem to be dealt with - the collapse of ITV1's audience, particularly among key groups most interesting to advertisers. When BBC1 first overtook ITV1 in annual audience share the spinners claimed that it did not really matter because ITV still dominated peak time, where its money was made. Now, there is nowhere to hide as the final bastion has fallen. In the past six weeks BBC1 had an average share of 25.9 per cent compared with 22.5 per cent for ITV1 between 7pm and 10.30 pm.

Apologists will mutter "World Cup", but this defeat is a symptom of systemic failure as ITV1 has lost all-important youth and upmarket audiences in droves over the past few years.

Charles Allen may not have been a programme-maker but he has to take ultimate responsibility for such a scheduling and commissioning failure which goes to the heart of the business. The rise of multi-channel television is a problem for all terrestrial broadcasters but ITV1 has fared much worse in both weekly reach and viewing hours than either Channel 4 or Five. The comparison is particularly bleak for both upmarket ABC 1 viewers and 16- to 34-year-olds.

Channel 4 now has an average weekly reach among the young that is only marginally behind ITV1, which is supposed to be the dominant mass-market channel. One working hypothesis is that there is not enough diversity in the ITV schedule - not enough reasons to attract the wider public. If more and more people feel that ITV1 is not for them the declining spiral could continue, with digital channels a mere palliative.

Everything now depends on halting and reversing the audience decline. The autumn schedule had better be good. Because of the contract rights renewal (CRR) deal that allowed the merger of Granada and Carlton to go ahead, advertisers have the right to reduce their spending on advertising in line with audience decline. The fall could cost ITV more than £200m a year.

You could take Simon Shaps, head of ITV's Granada production division, out at dawn but he has not been in charge of the new set-up long enough for his commissioning record to be judged. The nature of the challenge suggests strongly that while accountants, lawyers, former regulators, marketing men and even retailers might have their merits they are not ideal for this challenge. You almost certainly need someone who has run commercial television channels in the UK - preferably with some experience of programme making and commissioning.

This narrows the list considerably - to Greg Dyke, the former head of London Weekend Television, Andy Duncan, chief executive of Channel 4, and Dawn Airey, former head of Five and now in charge of Sky Networks.

Dyke is unlikely to want the 24-hours-a-day aggravation, Duncan will probably prefer to wait for a crack at the BBC and Airey turned the job down once and is probably dreaming of multi-millions running Murdoch channels in the US. This time, the headhunters will earn their money. While finding the right chief executive could scarcely be more vital, advertisers will also have to play their part. Ian McCulloch, ITV's commercial director, has been bluntly asking major advertisers what sort of ITV1 they want. Do they want a mainstream channel with original programming and drama? If so, it will cost more than £800m. If they want a £100m channel made up largely of acquisitions, they can have that too. It is simply a matter of business.

Without exception the advertisers said that they wanted a properly funded channel. But will they put their money where their mouth is when Charles Allen has gone? For all concerned it is already very late in the day.

Morrison's a happy bunny

If you see Steve Morrison, chief executive of All3Media, the UK's largest independent producer, it will be easy to recognise him. He's the one with the ear-to-ear grin.

Morrison was eased out as chief executive of Granada four years ago as the fall guy for the ITV Digital débâcle. It fact, it had been Sir Gerry Robinson who was the enthusiast, with Charles Allen a reluctant convert, leaving Morrison to take the flak. Morrison was entitled to a quiet chuckle as Allen fell on his sword.

But the real reason Morrison is a happy bunny is the deal that saw the venture capital giant Permira take control of All3Media, maker of Shameless and Hollyoaks among others, in a £320m deal. Morrison bought the company from Chrysalis three years ago for £45m, although it has been greatly expanded since.

All3Media now has the financial firepower to do almost anything. Wouldn't it be a hoot if it were to bid for ITV? Don't worry; Morrison's too smart to do that, but watch him pounce on other large independents.