campaignlive.co.uk, Friday, 31 March 2006 12:00AM
They get excited about the strangest things over there in the City.
Last week, as the opening gambits in the latest ITV takeover skirmish were made, there was fevered speculation in the financial community about the shiny new corporate structure being proposed.
The three companies that had joined forces on this bid - Apax Partners, Blackstone and Goldman Sachs - were advocating a novel arrangement in which private equity and public shareholders would enter a partnership agreement, enabling ITV to remain a quoted company.
Intoxicating stuff. But the media business tends to see this whole affair in rather more simplistic terms. This is Dyke versus Allen, two of the biggest gorillas in the media jungle. Greg Dyke, a former BBC director-general and a man rumoured to have mooted bidding for ITV previously, is, of course, in the venture capital camp; and facing him, defending his citadel, we find Charles Allen, the chief executive of ITV.
Or, dumbing down even further, this is Roland Rat versus the Cost- Cutting Caterer - for this, of course, was Dyke's jibe about Allen during a previous skirmish; while Dyke was tarred (somewhat unfairly) with the rodent brush when the cocksure Cockney puppet was brought in to rescue TV-am.
While profits have been encouraging of late, ITV has seen both audiences and revenues slide in recent times and the bidders claim there is room for improvement, especially where costs are concerned. Are they right?
ITV claims it has not been given much credit for the digital expansion strategy that has brought relative ratings success to ITV2, ITV3 and ITV4.
The airtime market remedies that allowed the Carlton-Granada merger are still in place - and there are those who might suggest it still needs an extended period of stability to work its way clear of the post-merger period.
Should advertisers welcome a successful bid for ITV, especially one that handed control to Dyke? Steve Huddleston, the head of media at BT, is not sure and he says he has some sympathy for the current ITV regime.
He explains: "It is true there was a period when people thought that things could only get better at ITV if its ownership changed. But I think what it has done with the new digital channels is excellent, though it's also true that the revenue performance of the new channels has not replaced money coming off ITV1. I suppose the debate is whether there are a hell of a lot of costs that can still be stripped out of the company. In that respect, if the venture capitalists came in with the attitude that ITV needed a short, sharp shock, then that could be a bit of a disaster for the network at this time. After all, it's not exactly a commodity business."
Mark Craze, the managing partner at Media Planning Group, says: "The question is all about who is going to invest in the right sort of programming to attract the audiences. Advertisers don't really care who it is as long as it happens. Venture capitalists are brilliant at getting extra value out of businesses. They tend to be very sharp about achieving quick returns and the worry is that their first thought is about the exit strategy. But ITV is getting leaner by the day and Allen's not exactly been reluctant to take action where costs are concerned. He's a finance director by background and, in fact, that's the criticism of him, isn't it - that he's not a programme-maker? No-one has ever doubted his ability to run a tight ship."
Richard Oliver, the broadcast director at Universal McCann, also sounds a cautious note. He says: "A period of stability at ITV may be no bad thing. If someone came in now with big ideas on the programming side, they would not have an immediate impact on audiences.
ITV always had the most to lose as the historical dominance of established broadcasters came under attack, so it's questionable to what extent someone new could turn back the tide."
Andy Roberts, the managing partner, EMEA, of Starcom, agrees that much of the flab has already been stripped out at ITV - a new management team would have to be offering a lot more than tough talking. He concludes: "ITV has done a lot of the painful stuff it needed to do; now it needs to position itself as a forward-facing company. During the analogue switch-off period, ITV1 is likely to remain the UK's biggest television station and as such it is very important to advertisers. It still has massive revenues and we want to see it building on that strength."
NO - Steve Huddleston, head of media, BT
"A couple of years ago, there were those who'd have welcomed Dyke. But he'd find it harder to make a difference now. If venture capitalists came in and gave ITV the short, sharp shock treatment, that would probably be a disaster."
MAYBE - Mark Craze, managing partner, Media Planning Group
"Where would the private equity people cut budgets? If the answer is programming, that would be a worry for advertisers. But I'd say it's still too early to judge. I don't think there is enough information available yet."
MAYBE - Richard Oliver, broadcast director, Universal McCann
"It's almost inevitable ITV is now going to be subject to bid speculation. So if change is inevitable, why not Dyke? At least he understands programming and the strategy would involve more than cost- cutting."
MAYBE - Andy Roberts, managing partner, EMEA, Starcom
"Dyke is a proven manager who gets things done, but I want to know more about the creative side. What would the vision be? What is the talent base? We can't judge until we have answers to those questions."
- Got a view? E-mail us at firstname.lastname@example.org.
This article was first published on campaignlive.co.uk