Axe Allen – and cut off the road of return

The tricoteuses in the City have dropped their knitting, the tumbrel is readied and the guillotine blade sharpened at the prospect of Charles Allen being led to his place of execution. If ITV’s next set of financial figures don’t meet expectations, its chief executive (who thus far has experienced more lucky escapes than the Scarlet Pimpernel) could finally be for the chop.

But what good would his dispatch actually do? The frustration over “a lack of vision” and “the wasting asset” ITV1 is understandable, but is difficult to see how alternative leadership could do much better, whether in the form of Goldman Sachs or Lord Hollick. ITV is facing an endemic crisis, much of which is beyond the control of individual executives, however talented they may be.

Indeed, if anything, there is good reason for not getting rid of Allen right now. Slowly, but surely, he seems to be pulling off a major propaganda coup with advertisers and the media agencies that serve them. When last year Allen first actively mooted the repeal of contract rights renewal (CRR), there was a lot of self-righteous indignation at the prospect of a monopolistic media owner (Granada) cynically tearing up the very agreement that had allowed it to merge with Carlton.

Now, Allen can raise the issue of scrapping CRR and expect to get a serious, if not always entirely sympathetic, hearing from the advertising community. A landmark change was the decision of Procter & Gamble’s chief media man Bernard Balderston to go on the record in calling for a timescale to end CRR. Most media agency executives would stop short of that, but do now recognise CRR has had consequences unwelcome to commercial TV’s ecology as a whole.

Sure, CRR has punished the bully; but in indulging their natural cost-cutting instincts, advertisers have embarked on a vicious circle that, some say, is damaging their own interests. Cheaper TV advertising has deflected revenue not only from ITV1 but television as a whole – digital being the main beneficiary. This capital flight has, most conspicuously, resulted in ITV racking up a compound loss of about &£100m a year, which its digital channels show no signs of staunching.

In the short term ITV can handle these losses, longer term everyone will be affected because the programme budget will be severely mauled. Resulting, of course, in advertising that is cheaper still; but who would want it? Theoretically, the vicious circle will only be closed when mass-market coverage disappears permanently from the screen. As Starcom chief Chris Locke puts it: “Are we all in danger of destroying the very channel that makes TV great?”

A sobering thought and one that’s achieving increasing resonance elsewhere in the ranks of media buyers and advertisers. Which is why Charles Allen should find he is knocking at open doors as he embarks on his agency roadshow.

It would be a sad irony indeed if commercial TV’s most influential power broker were beheaded just as he was on the point of bringing about industry consensus.

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