Media: Live Issue - Heads roll at ITV as Allen strengthens his grip

ITV Broadcasting's now ex-chief executive appears to have been made a scapegoat for falling audiences, Ian Darby writes.

When the chief executive of ITV Broadcasting, Mick Desmond, was called in to see his boss, Charles Allen, last Tuesday morning, he had no idea that there would be blood on the carpet - and most of it his.

It was the morning after the night before, when ITV had gathered some of the great and good of the ad industry to celebrate the channel's 50th anniversary. Desmond had been much in evidence that night, the acceptable - and warm - face of ITV. By contrast, Allen had managed to alienate much of the audience with a cold and dispassionate speech.

When it came, the decision to axe Desmond was both brutal and shocking.

And, as well as Desmond, ITV also disposed of the finance director - and long-time Allen confidante - Henry Staunton in a move to streamline its business. By Tuesday evening, the ad industry was beginning to buzz with the news and few people could find anything positive to say.

By Wednesday morning, Campaign was fielding outraged calls from advertisers and agencies. Desmond's departure, following that of Graham Duff, the managing director of ITV Sales, had stripped out the two most recognisable and likeable faces at ITV for advertisers. And just weeks ahead of the vital TV negotiation season.

Meanwhile, the Financial Times had followed up the story with the news that ITV's share price jumped as rumours spread that it was Allen who might be resigning, leaving the company open to a takeover.

In the end, ITV unveiled a whole new line-up with the chief operating officer of ITV Broadcasting, Ian McCulloch, moving to the role of commercial director responsible for sales and marketing. Simon Shaps, the chief executive of Granada, ITV's production arm, was appointed director of television.

The changes are indicative, insiders say, of Allen taking more direct control of the business.

Allen told journalists that Desmond was leaving because his role was being split into two and that he was "too big" for either role. Poor consolation for Desmond after giving 25 years of his life to ITV.

Of course, the media industry could be expected to rally around its own, and the support for Desmond and Duff is as much a reflection of their years in a relatively close-knit and supportive business as of the contribution they have made to ITV. Allen, still after 14 years at ITV a distant figure to the ad community, is easy to portray as the bad guy.

Nevertheless, critics of Allen say the timing of the axing, when the spotlight was so firmly on ITV, was designed to scapegoat Desmond for the underperformance of ITV1. Its audience share is down 6.3 per cent for the year to September and down 14 per cent among 16- to 34-year-olds.

Insiders also say that it had to be done quickly because autumn viewing figures are likely to show some improvement.

Defenders of Desmond and his regime argue that it was a thankless task to ask advertisers to pay more when the ITV1 product was underperforming so woefully.

ITV's central problem, according to one school of thought, is a reluctance to see itself as a broadcaster rather than a production house.

This stems from its reliance on Granada, now renamed ITV Production, for around 65 per cent of its programming. Some observers argue that the big long-term hits for ITV, such as The X-Factor and Midsomer Murders, are independent commissions, and that it needs to move further down this road to create a better product.

In fairness, the restructure attempts to take account of this, arguably creating a more streamlined structure to deliver better programmes.

However, the elevation of Shaps to the top programming role suggests there will be little change to the Granada powerbase.

McCulloch's role in this restructure, which is intended in Allen's words to "focus the company on the needs of four groups - agencies, advertisers, viewers and consumers", is intriguing. An ITV veteran and renowned tough guy who loves bloodsports and motorbikes, he will lead Gary Digby, ITV's sales director, on the front line of ITV's commercial operation.

To many, McCulloch, 45, is a shadowy figure. A former LWT salesman, he spent 15 years in various roles there before becoming the operations director for Granada Enterprises and then the commercial director for Granada Broadband. He then moved to Granada's broadcasting division and he was made managing director of operations for ITV Broadcasting, and then the chief operating officer of ITV Broadcasting earlier this year.

McCulloch is known to many as "Dougie" (apparently his middle name) to distinguish him when there were lots of Ians at ITV. Outsiders say he is ITV's equivalent of Peter Mandelson, creeping the corridors of power as Allen's fixer. Known for his ability to deliver cost savings, or "ROI" as he calls it, he was recently responsible for ITV's successful multichannel strategy and also the negotiation of ITV's platform deal with Sky.

After being promoted this year, McCulloch took a business course at Harvard and, on his return, Allen handed him the task of leading a consultation process called "Fast Forward". Fast Forward has led to the departure of Desmond and the creation of the new structure.

No-one seems to doubt that McCulloch has considerable skills but some worry that customer service and understanding the advertising proposition are not among them. An agency broadcast director says: "He's a man with a very clear focus and doesn't mind who he tramples on to get what he wants."

Naturally, this is at odds with McCulloch's own version of how ITV Sales will operate under him. Yet critics worry that no matter how many management courses he's been on, McCulloch is still "dyed- in-the-wool, old ITV".

But McCulloch argues that he, and ITV, have moved on. "ITV has a lot more to offer than the transactional stand-off and it's this that we need to try to unlock," he says. "It's about talking to advertisers about increasing the value of their businesses by using ITV rather than arguing about shares or budget."

So how will he adapt to the more visible, client-facing sides of the commercial director's role? "It's fine. I've been more about effectiveness and getting stuff done than hot air. That's what I want to do - delivery and getting stuff out there rather than just talking about it. So I will do as much outward facing stuff as I think benefits people, but I won't do it for the sake of it."

ITV, he says, has taken on board criticisms from advertisers and will work to deliver better programmes that will deliver the right audiences.

"They should see us delivering more of the valuable audiences they want to buy," McCulloch says. "But what it absolutely isn't is advertisers saying 'I like programmes about x, y or z' and us going off and making them. It's about saying to Simon (Shaps) - these are the audiences advertisers value and they value us delivering them in a certain way."

Yet critics say ITV's disregard for advertisers was epitomised by Allen's call for an end to Contract Rights Renewal, the condition placed upon the ITV merger two years ago that safeguards advertiser deals against falling audiences for a three-year period.

Christine Walker, the founder of Walker Media, says: "Allen has put somebody in to do exactly what he wants - a quick return to an arrogant, monopolistic ITV delivered via the abolition of CRR."

ITV's campaign against CRR will fall into McCulloch's remit. He says: "Charles has stated the company position. There are many frustrating things about CRR, not least that it fossilises parts of contracts when nothing in this business stays the same across three years. So it's actually holding advertisers back and prevents us developing advertisers' business with them."

Few agencies support this view, so McCulloch will be having some interesting conversations in the months ahead.

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