Ian Burrell: Can ITV stage a comeback?

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The station has seen a rise in ad revenue – but the new faces at the top need to perform after a run of high-profile flops

When ITV gave its blessing to Married Single Other it had high hopes that the show, made by Andy Harries, the award-winning producer of Cold Feet, and starring Ralf Little (The Royle Family) and Lucy Davis (The Office), would have a long and happy life.

Yet last week, after a single series, the show was abruptly annulled following disappointing ratings, leaving Harries to complain that "it's a horrible feeling to be dumped".

Married Single Other was supposed to rekindle ITV's long-lost reputation for making contemporary relationship drama, and its middle-class trappings were intended to deliver a wealthier audience for the broadcaster's advertising clients. But then ITV got cold feet over "the new Cold Feet".

At the highest levels of Britain's biggest commercial broadcaster there is no room for such faltering liaisons. A new and unexpected union has been forged at the top by Archie Norman, the former saviour of Asda who became ITV chairman in January, and Adam Crozier, the former head of Royal Mail, who took up post as the broadcaster's chief executive last month. Neither man has significant previous experience of the television industry.

And the relationship is more complicated than that. The two business leaders must forge a productive partnership with two well-known broadcasting figures: the ITV director of television Peter Fincham and the newly appointed Kevin Lygo, who has yet to start work as head of the in-house production arm, ITV Studios.

"Norman and Crozier are incredibly determined, and if they can create an effective combination with the traditional TV guys it could be a very formidable team," says one ITV figure of this delicate balance. "Its success or failure will depend on how they all accommodate each other."

After several years of being written off as a basket case with no long-term future in a fragmented media market, ITV has recently displayed a greater resilience. Earlier this month, it announced an 8 per cent year-on-year upturn in advertising revenues in the first three months of 2010, with the figure expected to rise to 22 per cent in the second quarter, on the back of the World Cup ad bonanza. There have been notable programming successes, with The X Factor winning its ratings battle with BBC1's Strictly Come Dancing at the end of last year, and the current series of Britain's Got Talent attracting audiences of 12 million.

In a major scheduling play by Fincham next week, the live stages of Britain's Got Talent will be shown nightly at 7.30pm, with Coronation Street – and the climax of a storyline involving killer Tony Gordon and his breakout from prison – following in the prime 9pm slot. Then there is Adrian Chiles, lured away from the BBC to front ITV's World Cup coverage and to man the sofa at GMTV – which looks likely to be rebranded to reflect that it is now wholly owned by ITV.

Video: Coronation Street under seige

Yet none of these apparent triumphs offers any guarantee of lasting success. Archie Norman knows this. His most recent speech to share- holders was laced with messages of caution about a business that is overly dependent on a "very volatile" and shrinking advertising market. "It is a bit like standing under a faulty shower: it either blows too hot or it is too cold and it is very rarely somewhere in between," he complained, admitting that by early next year ITV could "slip back into no growth or even negative growth".

The 8 per cent rise in revenues is not so much a sign of green shoots, as a small improvement on the off-a-cliff numbers of 2009. Luca Mastrodonato, media analyst at Ernst & Young, says small upturns in advertising have been experienced by other similar companies. "If you look at previous recessions, TV advertising tends to pick up before other media, so I think that was expected," he says. "If you look around Europe, the vast majority of the major broadcasters had good results for the same reason."

Norman explained his hiring of Lygo by complaining that ITV Studios has been "in gentle decline over the last few years", and emphasising that ITV needs to "find different ways of monetising and making valuable our product, both on the internet and internationally". To monetise content, ITV needs first to be making the stuff itself. Currently, the annual schedule of the flagship channel revolves around The X Factor and Britain's Got Talent, both of which are made and owned by Simon Cowell's company Syco. "Simon Cowell has ITV over a barrel," says one insider. Other successful, long-running ITV series, such as I'm a Celebrity...Get Me Out of Here and Dancing on Ice date from a previous management era, as do comedy shows Benidorm and Harry Hill's TV Burp.

The broadcaster is struggling to find returning hits. Last year's The Colour of Money was supposed to be the comeback vehicle for Chris Tarrant, the star of ITV's schedule a decade ago as the host of Who Want's to be a Millionaire. The new format involved contestants sticking cards into different coloured "cash machines" and shouting "Stop!" when the screen displayed the highest sum. It tanked and was dropped before the end of its debut series.

The Prisoner was an idea that ITV probably wishes it had kept under lock and key. The remake of the Patrick McGoohan cult classic was made with the American cable network AMC and stars Jim Caviezel and Ian McKellen. Despite debuting last month in a prime slot after Britain's Got Talent, the show had viewers reaching for the remote and delivered an audience of barely 3 million. Within a few weeks that figure had been cut in half. Even ITV's biggest talent has been struggling to deliver. Ant & Dec's Push The Button must be considered a flop when you take into account that the presenters are on a reported £5m each per year. As BBC rival Graham Norton observed: "Look at Ant & Dec with Push The Button. Saturday night television is what they do and they couldn't make that work."

Then there's Vernon Kay's The Whole 19 Yards, in which contestants struggle across a course to get in range of a buzzer that might allow them to get their hands on the money. Made at Pinewood Studios by the Endemol subsidiary Initial, it has struggled to justify being given the green light.

So many buttons, so many buzzers, but even with its own cash machines ITV can't hit the jackpot. If the broadcaster is to develop content that it can sell around the world, or persuade people to spend money on it in a pay-TV environment, then it will have to do much better than this. It's rare to hear criticism of the suave Fincham, who appears to be universally liked within the television industry. But he has been in post for 15 months and is close to the point where colleagues will be looking to him make his mark with some of his own breakthrough commissions. Lygo too will be under pressure to find international hits quickly, having been associated with Jamie's School Dinners and Ramsay's Kitchen Nightmares during his time as director of television and content at Channel 4.

Chris Curtis, associate editor of Broadcast magazine, says that one of Lygo's priorities will be to use his industry contacts to lure back the production talent that has abandoned ITV in recent years. "There has been a brain drain at ITV," he says. "It's partly the lure of the independent sector, where you can make your fortune and be your own boss. And working at ITV over the last couple of years has been quite difficult in terms of morale; it can't be a barrel of laughs when a company is shedding over 1,000 jobs and if you work in-house you are seeing the percentage of shows that you make for the network dipping under 50 per cent."

One thing is for certain: Norman isn't hanging around. He has trimmed the ITV non-executive board, moving on the deputy chairman and ITV veteran Sir George Russell, who was seen as an ally of Norman's predecessor Michael Grade, and Sir James Crosby, who led the embarrassingly slow search to find Grade's successor. The chairman is also actively courting the views of the staff, whom he encourages to contact him on his "Archie" ITV email account. "People internally are impressed with Norman," says Curtis. "He's not a TV industry person and there were some raised eyebrows – what does a guy from Asda know about running a TV station? What he has proved is that he's a quick learner and a good listener."

Although ITV cannot depend solely on revenue from 30-second spot commercials for ever, it is still well-placed to benefit from the fact that many big brands cannot find elsewhere the mass audiences which still tune in for its biggest shows.

"We shouldn't forget that ITV is a major player in television in the UK. In the US, you have three or four competitors of similar size in the market," says Mick Desmond, the former chief executive of ITV Broadcasting. "ITV still has a strong position. A lot of brands, as they are coming out of recession, are having to brand very aggressively, and television is both the quick fix and the way to build long-term brand awareness." That revenue could tide ITV over until the time when it has a string of homegrown hits to sell.

Although Norman, as a former Conservative MP, might be expected to have good contacts within government, there is still concern within ITV that the company's recovery will be hamstrung by the regulatory structure in which it has to operate. Contract Rights Renewal, which limits what ITV can charge for ads and how many commercials it can broadcast, remains a sore point. ITV also wishes to see public-interest arguments given consideration in respect of merger and acquisition deals where its activities are limited by competition laws.

New product placement opportunities – currently the subject of a consultation exercise led by the regulator Ofcom – could be worth £50m a year in added revenue.

But Nigel Warner, ITV's director of public affairs, argues that deregulation is essential if the organisation is to continue to support the wider television industry in Britain. "The important relationship is between liberalisation on the one hand and investment on the other," he says. "If ITV is not investing in content then our creative industries will suffer dramatically, because the new [broadcast] players coming into the market are not making that kind of investment."

How long do Archie and Adam and Peter and Kevin have? Grade talked of a three-year plan, and the new regime is asking for five years more. "It's always a bit 'jam tomorrow' with ITV," comments one observer. But Norman, the turnaround king, promises he will be the ITV chairman who delivers. "We cannot afford more false dawns," he concedes.

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