ITV's decline in recent years has been partly due to factors beyond its control. The most obvious is the rise of digital broadcast technology. The number of households that receive their television solely through analogue is rapidly diminishing. People have a broad range of channels to choose from and ITV is being squeezed. The days when advertising revenue gave it a "licence to print money" are a distant memory. And this trend will continue until Britain's analogue signal is switched off in 2012. In this context, the broadcast licence payment – designed at a time when ITV was the sole commercial broadcaster – was in sore need of revision.
But ITV also bears a large responsibility for its own situation. It responded poorly to the challenge of digital television. Its new service, ITV Digital, was a disaster and was launched into an advertising recession. While this may have been bad luck, the deal it struck with the Football League to televise lower division football was simple financial incompetence. And it has paid a heavy price. ITV Digital went bust and its successor, Freeview, is now part-owned by Rupert Murdoch's BSkyB.
On the programming front too, ITV's performance has been lamentable. ITV welcomed the Government's loosening of its public service commitments a few years ago. But it was a big mistake to discard quality for ratings so enthusiastically. In recent years the broadcaster has produced a succession of low-quality, down-market programmes. The crassness of offerings such as Celebrity Wrestling has been matched only by their unpopularity. And poor viewing figures have, unsurprisingly, resulted in poor advertising revenues.
The merger of ITV's two remaining big regional players, Carlton and Granada, has yet to improve the channel's fortunes. Yesterday's announcement presents the broadcaster with another chance. But it must not be wasted. Competition among broadcasters is healthy for our media – and ITV is not fulfilling its role. Unless it gets its act together it may find that it is not just the analogue signal that is switched off for good in 2012.