Can Disney-style marketing shelter ITV from a ‘perfect storm’?

ITV group marketing director David Pemsel is adamant that the broadcaster’s future is in its own hands, despite warnings that it faces a “perfect storm” of economic and industry conditions, unrealistic expectations and internal issues.

Pemsel says marketing is core to the content-led turnaround plan outlined by executive chairman Michael Grade last autumn.

He says the broadcaster has failed to capitalise on its in-house shows by not exploiting revenue streams such as merchandising and licensing. Borrowing from Disney’s marketing techniques, Pemsel believes ITV is best placed to become a media marketing powerhouse (MW last week).

“If you look at marketing in any other industry bar media, it is not just about marketing – it is about managing brands, creating value and charging more. That mentality within media is quite new, unless you are Disney or one of the film studios,” says Pemsel.

“And we are thinking about creating bigger, better, more valuable franchises. It is the logical conclusion of our turnaround plan, which involves a lot more content through ITV Productions.”

And, if the network can own more brands, marketing should and will have a greater role. In such circumstances “we have a responsibility beyond sponsorship and advertising revenue” in terms of driving people to the brand be it on-air or in the supermarket, he says.

Yet therein lies a flaw. Grade’s content strategy included a target for ITVP to supply 75percent of ITV1’s programming, a figure all but impossible because Fremantle Media, which supplies 8percent of ITV’s output including flagship shows such as The X Factor, is outside the 25percent quota that must be supplied by independent producers. Such targets are understood to be among the reasons that managing director of global content Dawn Airey quit the broadcaster for Five after only eight months.

Meanwhile, ITV’s share price hovers dangerously around the 40p mark, after dropping by 70percent in the past year, way below the 148p it entered the stock market at in 2004. And it is set to drop further, despite its highest viewing figures since 1993. “There are difficulties coming from all areas,” says ABN Amro analyst Justin Diddams. “It is almost a perfect storm.”

Back catalogue

And that, says one rival broadcaster, suggests ITV’s broadcasting, production and back catalogue are all worth more split up than together. If it were to be bought and split, Grade’s five-year plan would be in tatters.

However, Numis Securities analyst Paul Richards says: “It is too early to tell,” pointing to the long lead times inherent in TV. “I don’t think there is a magic bullet or that Grade could be doing a better job, but it is very tough out there and likely to get worse.”

Yet Pemsel is focused internally, on the coming season, and hints at an improved schedule under new director of television Peter Fincham and more ITVP content in the pipeline from Airey’s successor Lee Bartlett.

“We have got to make sure we own the content that comes our way and exploit it in every way possible. In the past we have suffered from waste leakage,” he says, adding that ITV must build its brands as successfully as it has done for others.

“All of Michael’s arrivals have been about changing ITV and getting every part of the business going in the right direction,” he says. With so much at stake, Grade and his deputies must hope the storm subsides.

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