Raymond Snoddy on Broadcasting: Could the big fish at ITV learn a lesson or two from the minnows?
Monday 01 September 2008
Two commercial broadcasting minnows from the Celtic fringe, SMG and UTV, have just reported financial results, and guess what? They have done much better than their old mother ship ITV plc in recessionary times.
SMG's core television business, home of Taggart these 25 years, managed flat revenues of £56m but produced a 26 per cent rise in operating profit at £4.9m. Of particular note though was the company's 14 per cent increase in regional advertiser revenue with more promised for the future.
Over in Belfast, there was an overall rise in revenue of 8 per cent in UTV's first half of the year with a fall in television advertising offset by growing success of its radio interests including TalkSport, the station created originally by Kelvin MacKenzie.
SMG and UTV are only minnows but can they, in their different ways, teach ITV a thing or two? The official line from ITV's executive chairman Michael Grade goes as follows. We have a plan, shareholders support it, but of course we have to deliver before anyone pays attention. And times are really tough, so patience please. Top-quality content is our business and, in the end, content and free-to-air television will win through.
However, as Grade stands firm, news from the media buyers is not good. ITV advertising could be down by as much as 16 per cent in October and at the very least faces two consecutive months of double-digit decline.
In the "How To Save ITV" session at the Edinburgh TV Festival, managing director Rupert Howell sang from the Grade hymn sheet: ITV didn't need saving. It was already making progress against The Plan.
An unconvinced MacKenzie told the Edinburgh audience that ITV should ditch all that regional nonsense which is just a drain on resources and simply run a wholly commercial national channel out of London. To emphasise the power of his argument the former editor of The Sun then performed a creditable Irish jig.
While ITV could strip back to the bare essentials, hand back its broadcasting licences and simply transmit a raft of digital channels on cable, satellite and digital terrestrial, it doesn't seem like a smart move.
In fact, might the emerging SMG experience suggest that the ITV should go in the opposite direction – paying more attention to its regional roots rather than trying to wriggle out of as many obligations as Ofcom will permit?
Increasingly, consumers are dipping into a wide variety of sources of entertainment and information, global as well as national. But in an uncertain world will those sophisticated media consumers also hanker after a sense of local and regional identity?
Perhaps Grade should keep an eye on what SMG chief executive Rob Woodward is getting up to in Glasgow just in case.
At UTV, television advertising has been falling but far less steeply than at ITV. In the current quarter the broadcaster expects a drop of 5 per cent but that compares with an expected decline of 13 per cent for ITV.
That adds up to partial support for the SMG regional theories but the possible UTV lesson is different. From nowhere in radio, the Belfast company now owns 20 stations in the UK and Ireland. In the first half year they produced a 31 per cent rise in operating profit with a 15 per cent rise in total revenue to more than £36m.
Small potatoes, maybe, but it goes some way towards justifying the claim by UTV chief executive John McCann that the company was right to diversify away from a purely television offering.
With the exception of Friends Reunited, ITV has little history of successful diversification away from its main UK television business – and that is why its sufferings are particularly acute at the moment.
Other helpful suggestions from Edinburgh – why not go for a transforming deal such as taking over Virgin Media? "Do you think we haven't thought of that," replied Rupert Howell.
No echo as 'Moving Wallpaper' springs back
Sometime in the spring, the excellent sitcom about television, Moving Wallpaper, will return to ITV. I'm happy to report that the best comedy about TV since the immortal Drop The Dead Donkey is already in production.
But alas it will return without its programme sidekick Echo Beach, the much maligned accompanying soap, starring Jason Donovan and Martine McCutcheon. This was a disappointing commissioning decision. The whole point of an imaginative piece of programme-making from Spooks producers Kudos was to follow the activities of the fictional soap opera production team (Moving Wallpaper) with the soap itself (Echo Beach).
Now, of course, the return of Moving Wallpaper will have to feature the axing of Echo Beach. What happens next is unclear.
The decision was presumably made because Moving Wallpaper got better ratings than the soap, as many people failed to stay for the second half-hour. But it's still a little sad that such an interesting experiment failed. Perhaps the link between the two halves was not always explicit enough?
There may also have been some confusion of purpose. The brace of programmes was originally intended for ITV 2 and a younger audience. For them Echo Beach would have played better as a more obvious spoof of a soap rather than an apparent attempt at the real thing. In the end, the audience was fatally split. Those who like sitcoms watched Moving Wallpaper but the soap fans were not satisfied by Echo Beach.
At least from the wreckage of this bold creative idea – just the sort of thing ITV should be trying – we have the wonderfully monstrous Jonathan Pope, the TV boss from hell.
Birt tastes Beeb bite
News has emerged of a revealing little contretemps at a private Ofcom dinner called to discuss the thorny issue of the future of public service broadcasting – an issue generating increasing heat.
The distinguished cast list included Lord Birt, former director general of the BBC, and Will Hutton, City analyst, former BBC journalist, distinguished author and chief executive of The Work Foundation.
You would have thought that men with their considerable experience of life at the Corporation would have seen eye-to-eye on the future of the organisation. Not so.
At the dinner Lord Birt argued strongly for one of Ofcom's favourite options – model four – the creation of a separate fund for all non-BBC public service broadcasting. It sounds like top-slicing of the BBC licence fee in all but name – something the BBC is fighting a battle against. Certainly the fund would be the repository for the portion of the licence fee the BBC will devote over the next few years to analogue switch-off. The former DG also argued that the BBC would just have to get used to the idea of a future without the licence fee.
This was all too much for Hutton, who has in the past attacked the Government for bowing to pressure from commercial broadcasters to keep the BBC "on short rations." The word "perfidy" was heard around the dinner table and Hutton accused Lord Birt of merely being a venture capitalist.
Which, of course, he is. Lord Birt is an adviser to private equity group Terra Firma, founded by City high-flyer Guy Hands. For the rest of the evening Hutton insisted on calling Birt "Guy" – behaviour which at least one of those present thought closer to abuse than reasoned argument.
What this says about Lord Birt's chances of becoming the next chairman of Ofcom is not clear. But at the very least he's sticking close to the arguments and keeping his own personal options open.
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