FORUM: Could viewers reap the benefits of ITV’s windfall? - It’s windfall time for the ITV network. Some six ITV franchises were renewed on favourable terms last week, freeing up a total of pounds 90 million in levy payments per year. How

Two weeks ago, the canvas. Last week, the means to do something creative with it. ITV is on a roll. Network bosses should try to scrape together enough loose change to play the lottery this weekend. They’d be a certainty for the jackpot - especially if it was run by the Independent Television Commission. Come to think of it, the ITC has, in its own small way, been running a lottery for years.

Two weeks ago, the canvas. Last week, the means to do something

creative with it. ITV is on a roll. Network bosses should try to scrape

together enough loose change to play the lottery this weekend. They’d be

a certainty for the jackpot - especially if it was run by the

Independent Television Commission. Come to think of it, the ITC has, in

its own small way, been running a lottery for years.



The canvas, of course, comes courtesy of the ITC - and no-one should

underestimate the opportunity created by the long-overdue superannuation

of News at Ten. It’s not exactly a blank space - the network has been

preparing to fill it for months, if not years - but part two of a rather

satisfying double whammy removing any conceivable excuse for skimping on

materials.



Last week was windfall time. Again, this was not entirely unexpected -

licence renewal procedures are enshrined in the 1990 Broadcasting Act.

The deal was that the ITC would offer new licences on new terms six

years into the current franchise period, which began in 1993. Those new

terms would reflect the changing economic and competitive circumstances

faced by the network and individual companies in it. In other words,

many of the companies, especially those which had ’bought’ their

franchises with high bids, could expect their annual ITC levies to be

cut.



Last week, GMTV, HTV, Yorkshire, Tyne Tees, Carlton and Westcountry

accepted new terms, the biggest winners being GMTV (which will save

pounds 30 million a year) and Yorkshire (pounds 17 million). Others,

including Central (which won its franchise with a ludicrously low bid

and actually faced a levy rise under licence renewal proposals), are

opting to play chicken with the ITC.



But the total clawed back by the network already stands at pounds 90

million. Can we reasonably expect that to be ploughed back into

programming? And can we expect that programming to translate directly

into audience share? After all, Richard Eyre, the chief executive of the

the ITV network, has set himself some tough targets.



As always with ITV, it isn’t that simple. Nigel Walmsley, Carlton

Communications’ director for broadcasting, states: ’We welcome the steps

the ITC has taken to reduce the special broadcasting taxes ITV pays each

year. With a lower tax burden we can compete more effectively. We can

reduce our tax payments by encouraging homes to take up digital

television. This gives Carlton a double benefit. More digital homes

means more subscribers for ONdigital and lower payments for our ITV

licences.’



Digital ad revenues (untaxed by the ITC) will, of course, eventually

replace terrestrial revenues. But it will hardly happen overnight - so

the thinking is slightly woolly. The gist is clear though. Digital is

the highest funding priority.



Some Carlton sources go further. They point out that ITV programme

budgets have been hiked several times in the past couple of years - and

that these increases were predicted on the assumption that a windfall

was just around the corner. In other words, where programming is

concerned, the money has already been spent. ITV sources also point out

the network has just lost almost pounds 90 million (a happy but

coincidental symmetry here) under revisions to the Channel 4 funding

formula.



The ITV Network Centre has been conspicuously cautious on this issue.

But should it be making a concerted play for some dosh? Or is it

resigned to the fact that the reality will be Caribbean Christmases all

round for ITV directors and a penny on the dividend for

shareholders?



There are cynics out there who think they know the answer. Patrick

Burton, vice-president of media and brand communications at Allied

Domecq, confesses he’s trying hard to resist that temptation. He says:

’It’s a wonderful Christmas present for GMTV and I’d like to think it

will invest something in GMTV2 (its digital service) - but I can’t see

it in the short term. GMTV has been making losses since it launched and

this will just about make up for that.’



Burton also has doubts about the network’s plans for ITV2, its digital

’feeder’ channel along the lines of BBC 2. He adds: ’There is far too

much pressure on ITV companies. They have to deliver to their

shareholders and anyone who has had any exposure to the pressures that

the stock market can bring to bear will understand what that is like.

That is why Channel 4 will continue to do so well in comparison with

ITV. I’m a believer in Richard Eyre and he genuinely believes he can

lift the network out of the mire it’s in - but I’m still reasonably

sceptical.’



And, as Paul Parashar, broadcast director of New PHD, points out, the

windfall isn’t evenly spread. This may not be an ITV network issue at

all. He says: ’Yes, there’s an opportunity to spend more on producing

the right programmes now News at Ten has gone, but I think this will

come down to individual decisions taken by individual broadcasters.



’In that light, the greatest impact may be felt at GMTV - pounds 31

million there could make a huge difference. But with the rest of the

network, they spend so much already that more money won’t make quite the

same degree of impact and viewers wouldn’t see that much

difference.’



Parashar feels that the impact will be felt in more oblique ways. ’One

of the most important things is the degree of security they all have for

another ten years now. And what it will do is allow individual

broadcasters to continue to invest in their marketing and brand

development,’ he says.



Dave King, the broadcast director of Carat, argues that the News at Ten

move is a great opportunity - but the network has to make sure it grasps

that opportunity. And if it does so, it will certainly be rewarded. He

says: ’ITV needs to invest in quality programming, particularly popular

and contemporary drama. It also needs to crack comedy and to fight its

corner in the sports arena. If it addressed those issues, the additional

funds would be put to good use. If ITV grows its audience, it can grow

revenue. Above all, I am delighted for GMTV, which can now buy a new

sofa.’



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1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).