The battle of Britain's favourite TV channel
Angry advertisers and new rivals are threatening the cosy world of ITV. Mathew Horsman asks if there's a crisis in the making
Tuesday 04 July 1995
Notwithstanding an upturn in ratings last week, audience share has dropped sharply in recent months, as viewers turned increasingly to BBC1's improved prime-time offerings. So far this year ITV's share has dropped to 41.6 per cent, compared to 43.8 in the comparable period in 1994. Advertisers are complaining loudly about higher prices for air time, and want to see better programming and a larger viewership to justify their pounds 1.5bn- plus spending. "Shape up or we go elsewhere," was the message from the Association of British Advertisers last month.
Although ITV heads laugh publicly, there is private worry about the inroads pay-TV has been making in Britain, and about the prospects for a third commercial channel, Channel 5, from early 1997. With a radical transformation coming from digital TV, a cosy world is in for a shaking.
Hence a new battle plan; the results will be there for all to see in the autumn. Prime-time production budgets are to be increased by "several" million (nowhere near the pounds 40m rumoured in recent days). A dozen blockbuster films scheduled for broadcast later this year and in 1996 have been brought forward. ITV companies are also pressurising the Government to award digital channels to existing licence holders, allowing them to develop additional streams of programming.
Leslie Hill, the chairman of ITV, said: "We are not prepared to sit back and have someone take our market share." Hill concedes that the short-term moves are in direct response to lacklustre ratings. "Recently, there have been a few poor months. We had to react."
The quick response is largely the work of Marcus Plantin, head of ITV Network Centre. He put together the new strategy, and sold it to ITV chiefs at a meeting late last month.
Action was clearly needed. Rationalisation and cost-cutting in recent years have had negative effects on programming. That was fine for as long as the BBC floundered, producing weak dramas and humourless comedy. But the public broadcaster has lately recovered its form.
Putting on a brave face, Michael Green, chief executive of Carlton Communications, operators of the London weekday and Central licences, told media analysts privately that the BBC had made its recent strides by copying ITV. He vowed to fight back. "We will surprise you," he told his City audience.
Is Plantin's plan enough to stop the rot? Critics of ITV, unsurprisingly, say no. They point to a decline in quality and a lack of imagination in scheduling and commissioning. The ITV companies are complacent, they argue - too happy to reel in monopoly profits and not clever enough to prepare for increased competition from satellite, cable and digital TV. "These guys have been granted a licence to print money," said one pay-TV executive. "They don't like competition."
For their part, advertisers have their own agenda. Their association recently recommended extra air time for commercials and, once again, a new slot for News at Ten to free the evening for uninterrupted films - uninterrupted, that is, except by adverts. Advertising rates have increased well ahead of inflation in each of the past two years. Big spenders don't like that; declining audience figures merely intensify their anger.
They are impatient for the debut of Channel 5, if that is what it takes to temper future rises in advertising rates. Bidders for the Channel 5 licence expect to win a comfortable share of the national audience within two years, perhaps as much as 12 to 15 per cent. Generally lower ad rates should result.
In the longer term ITV's real threat may come from the non-terrestrial sector. Senior ITV executives, as well as Channel 4's Michael Grade, have added their voices to the throng complaining to the Government about BSkyB's stranglehold on the pay-TV market - particularly its control of major Hollywood output and sports coverage.
"The UK Government has been extremely dilatory in dealing with the monopoly BSkyB enjoys," Michael Green said at an industry conference last month.
BSkyB's response to ITV sniping is blunt. "They are worried about the introduction of digital television," says David Elstein, head of programming. BSkyB is preparing to go digital by early next year. And complaints, no matter how vociferous, cannot change the underlying trends. Cable and satellite combined may have a miniscule market share, but the numbers are growing, if slowly, with Sky's sports and movie channels leading the way along with the BBC-fed UK Gold. About 4.5 million homes in Britain now have either satellite or cable. That could reach 10 million within five years.
Just signing up for cable or satellite does not necessarily mean viewers will abandon the BBC and ITV. Indeed, households with the new alternatives still watch the traditional channels more often than Sky or other services. But internal studies by the BBC suggest that the audience share of the "traditional" broadcasters will drop from 85 per cent to about 60 per cent within five to 10 years.
Cable and satellite are already making small inroads into ITV's share of the advertising market. In 1993, all the ITV companies combined took 78 per cent of the pounds 1.9bn spent on commercial TV advertising, compared to 17 per cent for Channel 4 and 5 per cent for cable and satellite. By last year, ITV's share was down to 75 per cent, while Channel 4 took 19 per cent and satellite and cable 6 per cent.
There may be another threat on ITV's horizon: a fully commercial BBC. The public broadcaster has become involved in several commercial ventures, not least UK Gold. It is also looking at forging links to commercial on- line electronic service companies such as CompuServe.
Such moves have again raised questions about the Beeb's public-service charter. Stephen Dorrell, the National Heritage Secretary, told industry leaders last week that the advent of digital TV would so transform the television industry - fragmenting audiences and increasing viewer choice - that the licence fee might become indefensible. In a head-to-head battle for advertisers in a fully commercial market, the BBC - with the best brand name in the business - might well give ITV a fright.
ITV's brand, meanwhile, looks decidedly hazy, Network Centre notwithstanding. The franchise wars of 1991 transformed the unified ITV kingdom into a series of fast-buck fiefdoms: increasing loss of identity has been the result. Fragmentation, ratings chasing and being advertising-driven will make it easier for the product pushers to dictate terms. It could make ITV companies act more and more like cable companies - pursuing viewers downmarket with the wild abandon that typifies American television.
The serious challenges to ITV are, admittedly, some way off. In the interim, the commercial companies retain their privileged position. But they need to prepare for inevitable change. A few million more on programming and a shake-up of schedules might safeguard audience share for a time. In the long term, minor tinkering won't be nearly enough.
It scooped up an unprecedented 11 Academy Awards when it was first remade in 1959
Actors star in Woody Allen's 'Magic in the Moonlight'
Olympic diver has made his modelling debut for Adidas
...and the perfect time to visit them
Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result
Sports Direct security guard allegedly banned Jewish schoolboys and told them: 'No Jews, no Jews'
Scottish independence referendum: A nation divided against itself
John Travolta addresses former pilot's gay romance allegations publicly for the first time: 'That was the lowest I'd ever felt'
Richard III: Two years after his body was found scientists discover how he died
Scottish independence exclusive: Millions of banknotes sent to Scotland in case Yes vote sparks run on ATMs
- 1 iPhone 6 review: bigger, thinner, faster, brighter - Apple proves you can make the best better
- 2 Sports Direct security guard allegedly banned Jewish schoolboys and told them: 'No Jews, no Jews'
- 3 Watch a man race the Circle line - and win
- 4 Pakistani passenger power forces two politicians off plane
- 5 Kanye West halts concert after two fans don't stand up - doesn't realise one is in wheelchair and the other disabled
£60000 - £85000 per annum: Ashdown Group: Interim Head of Marketing / Marketin...
£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...
£25 - 30k: Guru Careers: A Digital Project Manager is needed to join an exciti...
£24 - 28k + Benefits: Guru Careers: We are seeking a Paid Search Analyst / PPC...