Fall in share of commercial TV income fuels ‘single ITV’ lobby

ITV is in one of its periodic flurries of consolidation. Scottish Television has finally absorbed Grampian, Granada is on the point of swallowing Yorkshire-Tyne Tees, United News & Media is circling HTV and, to add spice to the mix, Gerry Robinson has called for the process to move to its logical conclusion – a single company running ITV.

The Granada chairman may have been making mischief, or stating the obvious. Most people assume ITV will one day be run as a single operation: the only questions are how soon, in what form and who will end up on top?

Ever since the Government allowed the first TV mergers in 1993 – after decades in which the purity of ITV’s regional structure had been inviolable – the commercial companies seem to have been in a drawn-out game of musical chairs in which, when the music stops, not one but three chairs are taken away.

Unfortunately for those who like their dramas to reach a crescendo in the last act, rather than the first, several of the biggest players went out in the first round.

Michael Green’s Carlton snapped up Central even before the music died away; Robinson’s Granada pounced on LWT shortly afterwards (eventually securing a submission); and Lord Hollick’s Meridian snapped up Anglia. The “Big Three” companies were in place: since then, other moves have been mere mopping up.

When the two-licence limit was lifted last year, Carlton promptly bought Westcountry from under the nose of United, Granada took 27 per cent of Yorkshire-Tyne Tees and United bought 29.9 per cent of HTV. Now those establishing moves are coming to fruition – but we are still a long way from the end-game.

With the Broadcasting Act prohibiting any company from controlling more than 15 per cent of the audience, and a 25 per cent limit on any group’s share of terrestrial advertising revenue, the law would have to be changed to produce even a two or three-company ITV, let alone a single operator. But, as observers have been quick to point out, Robinson’s declaration for Labour just before the election means he is in a good position to lobby for that change.

Is there any justification yet for moving to a single company? Some would say the increasing competition for audiences and advertising, and the decline in ITV’s audience share, so bemoaned by the Institute of Practitioners in Advertising, provide plenty of ammunition. And certainly ITV looks increasingly unwieldy, trying to keep up with commercial competitors whose reporting lines are shorter and sharper.

That is why a restructuring of the ITV Network Centre would remain a priority, even without the imminent departure of Marcus Plantin and the renegotiation of the ITV licence fees. And why the perennial debate over moving News at Ten is getting a new airing. But a single ITV company?

Unfortunately for those within ITV who are arguing for a relaxation of the ownership rules, and a renegotiation of their licence payments to the Treasury, the ITV Network Centre keeps insisting it is doing well. It points out that in the all-important peaktime hours, it has maintained a substantial lead over the BBC, even beating the Lottery on Saturday nights!

In terms of overall share of audience and ad revenue, ITV is way ahead of its commercial competitors. And, as Granada’s accounts last week showed, ITV is a highly profitable enterprise.

Nevertheless, for those wanting to push the gloomier view to the Government and the regulators, there is no shortage of material.

The latest straw in the wind is research by RSMB for the cable industry which shows that, in the 15 months to March, ITV’s audience share in cable homes has dropped by nearly four percentage points to “an all-time low” of 21.5 per cent. By contrast, the share taken by cable and satellite channels has gone up by five points to 49.4 per cent. It may not be BARB data, but the survey specification was approved by the IPA technical appraisal committee.

Not surprisingly, Mirror Television’s Kelvin MacKenzie has been quick to predict ITV’s demise. “If ITV continues to lose audience share at this rate,” he chortles, “Live TV will be waving to them as we pass; us on the way up, them on the way down.” Hyperbole, but it may be a quote Robinson would care to pass on to his “One-ITV” lobbyists, or direct to Heritage Secretary Chris Smith.

But if the Granada chairman really wants to show how ITV’s competitive position is being eroded, he need look no further than the Independent Television Commission’s latest annual report on the finances of commercial TV.

In four years, ITV’s share of commercial TV income has fallen by 18 percentage points – far more than the drop in its audience share. In 1993, it took 72 per cent of commercial TV’s total income. In 1994 this fell to 65 per cent. The following year it was 59 per cent. Last year, the ITC reveals, it went down to 54 per cent.

In the same four years, cable and satellite’s share of the income has grown from 16 per cent to 33 per cent. The difference, of course, is pay-TV, a market that ITV remains unable to tap into, other than as an investor in cable and satellite. Subscription now accounts for a quarter of all commercial TV revenue, and is worth just over 1bn out of a total of 4.2bn.

This, of course, is why Granada, Carlton and United are scrambling to get into multichannel and digital TV, as well as carving ITV into bigger chunks. And as they lobby for lower licence payments and higher ownership limits, one statistic seems unavoidable.

This year, ITV will take less than half of commercial TV’s income.