A nose for broadcasting – but not for business?

The shock news that TV grandee Michael Grade is to lead ITV has left the BBC reeling and the commerical broadcaster rubbing its hands with glee. But it’s early days to be celebrating, warns David Benady.

Advertisers have waited a long time for some good news from ITV. The UK’s leading commercial broadcaster has delivered it this week in a most astonishing fashion.

The beleaguered broadcaster’s appointment of BBC chairman and TV grandee Michael Grade as executive chairman looks likely to change the whole landscape of the UK’s £3.4bn commercial television market.

What was unimaginable last week suddenly starts to look possible. Grade’s appointment promises to bring a revitalisation of ITV. Under his experienced hand, it could create popular new programmes that attract viewers among those hard-to-reach young and middle-aged upmarket audiences so sought after by advertisers. He cannot stop ITV’s long-term decline – no one can do that – but he can at least stem the tide.

Media buyers were in superblative mood after the unexpected news. “Brilliantly inspired”, says one, while another adds: “We are thrilled and absolutely ecstatic.”

Distant past
However, some wonder how Grade will cope with the strains he will undoubtedly be under. As BBC chairman since 2004, Grade admits he has been working “at a distance” from television programming in that time. How many years is it since he last commissioned or produced a programme? This scion of an entertainment family began his TV career in 1973 when he joined London Weekend Television, eventually becoming director of programmes. In 1984, he was appointed controller of BBC1 and then ran Channel 4 as chief executive between 1988 and 1997.

But he has been away from the swirl of frontline broadcasting for a decade, and he is now facing one of the toughest media jobs on the planet. Some claim he is not used to working that hard any more – his tenure as BBC chairman was preceded by a stint as chairman of Camelot. But at ITV he will be expected to take the broadcaster by the scruff of the neck, and will effectively be chief executive, programmer and chairman.

Grade strength
Grade certainly ticks the boxes for leadership, inspiration, creativity, and in-depth knowledge about programming and station positioning. His particular strength is in competitive scheduling, which will be crucial for fighting back against BBC1.

But some question his abilities as a businessman. His time as chairman and chief executive of his family’s leisure conglomerate First Leisure – which he joined in 1997 with a brief to break it up – was considered ill-fated. Critics said he sold off the businesses at way below their real value.

Some wonder if he is hard enough to bring in further cost cuts at ITV, though Numis analyst Paul Richards thinks ITV has been cut back as far as it can go. But then again, he also believes the programming budget does not need to rise. That said, one of Grade’s first moves this week was to cancel a proposed ITV plc share buyback, saving up to £250m, which will be ploughed back into programme making.

Battle with the Beeb
He will need it. Programme making is going to get expensive if Grade’s relaunch leads to a spiral in the price of talent as a bidding war begins with the BBC.

Some believe Grade is leaving the BBC in the lurch – mid-licence fee negotiations and after he created a governance structure with a “Board of Trustees” that no one wanted, though he reassured them he would run it. Now he is off, leaving vacant a “horrible” chairman’s job he created that involves standing up to director-general Mark Thompson on behalf of licence fee payers, a role only Disgusted from Tunbridge Wells may want to fill.

Money or a knight?
Grade may have forsaken the chance of a knighthood with this move, though in the balance between becoming Sir Michael Grade and being extremely rich, he appears to have settled on the latter – he will make some £8m if he fulfills his three-year contract at ITV. Some seem to feel Grade believes he has never made as much money as he deserves. That is unlikely to be a problem in the future.

Who will make the grade in ITV’s top tier?

Grade insists that he will not be making changes to ITV’s creative team. “We now have to have a period of stability and confidence,” he says. “There’s a very good team here and all they need is a bit of confidence and leadership at board level.” Last week, Procter & Gamble associate director of media Bernard Balderston called for ITV to keep faith with its existing sales and programming chiefs under new leadership (MW last week). “ITV does not need another change of direction,” he said. As Thinkbox chief executive Tess Alps says: “There are a million brilliant people at ITV and they just need leadership. He is someone to protect those people from external pressure of the City and advertisers to give them time to perform.” Yet others predict that ITV’s top tier will inevitably change, some ITV lieutenants being incompatible with a Grade-led broadcaster. Says one agency executive: “None of them is the world’s number one – it seems to be a line-up of number twos, who have spent a lot of time in other people’s shadows. Some will have the potential to move up, others, though, won’t.”

Gary Digby
The managing director of ITV Sales, which is soon to be rebranded as ITV Media, is also a product of the “bad old” ITV days. He has been described as the “living embodiment of the old world”, too concerned with profit over programming. Yet others point to the rebrand exercise, which will see an increased emphasis on planning as well as selling. “He – and ITV – are going in the right direction,”says one. Another advertiser speculates that Channel 4 sales director Andy Barnes could be lured to the broadcaster: Grade was instrumental in Barnes’ appointment during his tenure at Channel 4.

Jeff Henry
The chief executive of ITV Consumer, which houses Friends Reunited and ITV Play, has been widely praised for adding “tens of millions” to ITV’s bottom line. “I think he’s terrific,” says one former television executive. “That corner of ITV has a completely different feel to it.” Another, though, believes ITV – and Henry – must make more of its internet properties, such as Friends Reunited.

Ian McCulloch
The commercial director and former ITV Broadcast chief operating officer who was promoted alongside Shaps 14 months ago garners mixed reviews. He is described as “likeable” and full of momentum although some say he is “part of yesterday”. One of Grade’s biggest jobs is to get rid of Contract Rights Renewal, which won’t be easy with McCulloch – who is closely associated with it – on board.

Simon Shaps
The director of TV and former Granada chief executive has received some plaudits since taking the post last September, despite such ratings flops as Rock Around the Block and Love Island. He is credited with aligning programming more closely to sales and for joining the sales teams on their 2007 agency presentations this year. But one insider reveals: “No one thinks Shaps is a long-term bet. The chance of him staying for more than ten minutes is slim.” Kevin Lygo, he says, is an obvious replacement, with ITV’s board “in thrall” to Channel 4 at the moment.

Clare Salmon
Question marks hang over Salmon’s role as director of marketing and commercial strategy. The former AA marketer remains one of media’s most flamboyant operators, yet one former ITV executive says she may be passed over in favour of rising star David Pemsel, a former St Luke’s and Boy Meets Girl executive who was appointed as marketing director in October last year.

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