A worried YTTV barks at Laser

The message seemed clear enough. Speaking at his company’s interim results presentation last week, Yorkshire-Tyne Tees chairman Ward Thomas took the unusual step of disclosing details of the trading arrangement between the ITV licensee and its airtime sales house, Laser.

Part of this deal, Thomas told the attendant City analysts, was a guarantee that YTTV’s share of ITV revenue would average at least 10.9 per cent this year. If, as seems likely, Laser fails to achieve that target (share for last year was 10.67 per cent, and for the first half of this year just 10.22 per cent), Thomas would dispense with Laser’s services.

As incentive plans go, this borders on the despotic. The relationship between YTTV and Laser is inevitably clouded by the fact that Laser is a subsidiary of Granada, which acquired 24 per cent of YTTV earlier this year, as the pre-cursor, most analysts believe, to a takeover of its northern neighbour.

For large sections of the media community, therefore, Thomas’ remarks merely led them to answer two separate questions. Firstly, how good a job is Laser doing, and whether another sales house or standalone operation would perform better. Secondly, how much are these comments merely the opening salvoes of an elaborate disinformation campaign, designed to fatten up YTTV for takeover?

The answer to the first of these questions is more straightforward. True, YTTV’s share of ITV revenue has fallen from 10.28 per cent in the first half of 1995, to 10.22 per cent for the corresponding period this year. In terms of relative performance, however, that leaves the region solidly mid-table, behind stations like London Weekend and Scottish, but showing a smaller share decline than seven stations, including Central, Carlton and Meridian.

Further, Laser, and its chief executive Mick Desmond, inherited the Yorkshire sales contract from MAS. The latter’s aggressive attempts to increase share had alienated advertisers and led to an overdealing crisis that nearly brought the whole company to its knees. YTTV’s share of ITV airtime revenue in 1993 was just 9.55 per cent, and most agencies believe Laser has performed well in turning things around from there.

“The fiasco at MAS really left YTTV in the doldrums,” agrees Edward Lloyd-Barnes, a director at IDK Media, “and Laser has done a pretty solid job in stabilising the problems it inherited. In fact, it will probably go on to show another small increase in share over the full year.”

Small increases in share are apparently not enough for YTTV management, however, and Thomas has been talking of an overall target of 13 to 14 per cent for the region. The last time YTTV enjoyed a share of over 13 per cent was in 1985, and a return to those halcyon days seems unlikely.

“The reality of the ITV market has completely changed in the decade since then,” says Lloyd-Barnes. “In those days, there was cheap share to be picked up against the smaller stations, but now that everything is controlled by three well run and professional sales houses, there aren’t any easy share points around.”

And in Laser’s defence there have been some extraordinary factors that could have helped derail share growth. YTTV has missed out on much of the mobile phone advertising money that has helped expand the overall market, while airlines, a category that rose by 38 per cent in the first half of the year across ITV as a whole, is also heavily biased towards London and the South. Nor does the immediate future offer much hope of respite. YTTV is likely to be the softest target for Channel 5 next year. So would the company really fare better under other sales arrangements?

It could certainly set up its own sales house. This would carry the advantage of not having to balance the needs of different paymasters. Insiders point out mischievously that of Laser’s three main stations, Granada and YTTV, which both increased share last year, have slipped back this time, while LWT, which fared poorly last year, is currently the best performing of all the licensees.

As the regulations stand, YTTV’s airtime could not be sold by another of the sales houses without it relinquishing one of its existing clients. “That wouldn’t really be a problem,” says one broadcast director, “TSMS and Scottish have had their problems for example, so YTTV could fit in there. But it would be with Anglia and Meridian, both MAI-owned like TSMS, and so back to exactly the same situation it is in now. Frankly, its hard to see where much more share could come from whatever new sales arrangements YTTV made.”

All of which has left observers looking for alternative theories to explain away the very public nature of the spat.

“I think there has been an element of mismanagement at Laser and that it hasn’t really reconciled the problems of having to keep Granada, YTTV and LWT all happy,” says Russell Boyman, broadcast director at Mediastar. “But a lot more of this debate is good, old-fashioned sabre-rattling by YTTV, which is trying to push its share price up and force Granada’s hand in any takeover. After all, if it really wanted simply to improve its sales performance, it wouldn’t alert media buyers to its chief area of weakness.”

Ultimately, though, the attractions for Granada of having control over the whole northern block of ITV are considerable, as both YTTV and Granada are well aware. As a consequence, it would be a big surprise if Granada let YTTV get away, even if it ultimately has to buy the company to keep it.

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