GMTV builds on shaky ground

It may not be much, but GMTV has made a profit three years into its franchise. Its results out this week show that for 1995, the company made a pre-tax profit of 1m. That is from an advertising sales revenue of 82m and after paying the exchequer 12m in annual fees for the national morning franchise.

An eight per cent year-on-year increase in ad sales revenue accounts for the move into profit, but a GMTV spokeswoman makes no bones about the precariousness of the company’s profitability: “If we lose the 4m that Channel 4 gives us every year we’re in schtuck. We bid for the franchise based on getting the Channel 4 rebate.”

GMTV’s previous difficulties lie in the direct connection between its viewing figures and its revenues. Unlike ITV, with its station average price system which takes in money and the market decides on the value of its impacts, GMTV sells its impacts at a fixed price. In other words, if it doesn’t have viewers it doesn’t have anything to sell.

If the channel’s ratings go down it needs to find more slots to meet its deals. If the ratings go up, however, it has more inventory to offer and can seek extra revenues.

GMTV’s impacts are sold at an average 50 per cent discount on the average ITV price because of what the channel lacks in wide coverage. Its main audience is housewives with children which it sells at between 15 to 20 per cent below ITV’s price. Its main advertiser categories are food and toys.

“We’d love to charge more for our time of day as we catch housewives before they go shopping,” says ad sales director Clive Crouch. “Our heavy viewers are the two-trolley families, the bigger shoppers.”

GMTV benefited from ITV’s difficulties with airtime inflation last year, but 1995 would have been better if it hadn’t been for a warm autumn, when all daytime viewing declined as kids stayed outside.

The BBC’s decision to start showing cartoons on BBC2 from 7.40 each morning has also hurt. Cartoons helped BBC2’s viewing share rise from two per cent to seven per cent and prompted GMTV to bring back Power Rangers on weekdays.

Audiences have also been declining through 1995 for both GMTV and Channel 4’s Big Breakfast because of the popularity of satellite and cable with young families. The reach of both channels has held up, but viewers are spending less time with each channel.

Channel 4 attracts some children to the Big Breakfast but sees the show as a supplier of more 16 to 24-year-olds for its overall inventory. “It is an incredibly valuable part of our supply,” says Channel 4 sales director Andy Barnes. “It gives us young, light viewers who are hard to reach elsewhere.”

Channel 4 had to introduce new presenters to the Big Breakfast over the past month as it was felt to have gone stale since Chris Evans left.

GMTV, meanwhile, welcomes BBC1’s decision to start running Breakfast Time until 9.20am from this week instead of starting Kilroy at 9am since Kilroy encroaches on GMTV’s audience.