At a time of year when most TV sales people are traditionally
looking forward to spending the next few balmy months strolling up and
down a golf course with their industry mates, a distinct sense of unease
is rippling through the TV market.
In an uncertain economic climate, where the advertising boom of last
year is thrown into share relief against the gloom of this year,
calculators are being nervously thumbed as revenues, particularly for
ITV, look pretty unappetising.
As if this wasn't uncertainty enough, the Independent Television
Commission has just waded in with new rules on airtime sales that could
reshape the airtime-sales landscape for the next few years.
The ITC has revised the rules on advertising sales arrangements, putting
in place a structure for the TV market for the coming two or three
years, before the next grand debate ensues over whether ITV should be
allowed to exist as a single sales entity.
When the ITV companies Carlton and Granada took dual control of ITV last
year the spectre was raised that rival channels, such as Channel 4,
Channel 5 and Sky, should be allowed to consolidate in the name of fair
But last month the ITC decided that while smaller sales houses with a
national advertising revenue (NAR) share of less than five per cent will
be able to band together to compete effectively in a consolidating
marketplace, it would not be in advertisers' interests to allow the
bigger national channels to sell jointly. The only concession is that
GMTV can now be sold by ITV rather than being hived off as a separate
So at a time of economic belt-tightening, the new rules could see a
fresh shake-out of TV sales arrangements. But what are the most likely
effects of the changes?
Well, thanks to the ITC's decision, ITV still rules. Despite the fact
that ITV is currently facing one of its toughest battles in the
advertising market, the latest ITC rules cap a succession of decisions
which have served to strengthen ITV's hand. First, the network was
allowed to metamorphose from three ITV franchisees into two, with the
merger of United News & Media into Granada, leaving the latter and
Carlton as the two real protagonists.
While the advertising industry looked on in horror at the inevitability
of one ITV rearing its head, it seemed that Carlton and Granada would be
an unstoppable force with almost 60 per cent of NAR between them.
Shortly afterwards, as ITV wrestled with the Independent Television
Commission about moving the news at 11pm back to 10pm, it managed to cut
a deal to gain extra minutage, which was also extended across the other
Ironically, the fizzling out of the dotcom advertising boom and the fact
that key advertisers such as the car, financial and consumer goods
advertisers suddenly began to get cold feet about the economy has meant
that the extra minutage is helping to drive significant deflation on
The picture has so far not got any better, and although it is hoped that
things will pick up from September, analysts and agencies are predicting
that ITV's revenue could be down as much as 10 per cent by the end of
the year. Mindful of this, Carlton and Granada have put their
competitiveness to one side as they go beyond media agencies to lobby
creative agencies, making them aware of the advertising opportunities at
ITV. Such willingness to tout their wares and try and drum up extra
business is a far cry from the ITV of five years ago.
But as well as inviting general relief that, for now, the breaks have
been put on ITV's consolidation, the ITC's revised rules have clearly
stated that there can be no joint selling of airtime by Granada and
Carlton; the two London Channel 3 licensees cannot be sold together and,
following the Competition Commission's concerns last year about 'share
of ITV deals', these are still prohibited.
Andy Barnes, the sales director of Channel 4, seems pleased with the
over- all picture, although the ITC's comment that "these rules will be
kept under periodic review" has not dispensed with his unease about
ITV's position. "Broadly speaking it's fair - the key perspective is
that ITV is not allowed to join forces. It is also illegal to collude
and they can't do share of ITV deals. Our concerns are that the ITC has
said there would be periodic reviews - how periodic is periodic and on
what basis will that be made? To our way of thinking ITV has 59 per cent
of TV revenue - what's the number that ITV has to get down to before it
is even considering letting them get together? It shouldn't be
considered before less than 40 per cent - anyone with a share of 40 per
cent or greater will exert monopolistic practice. It would distort the
While it has been rumoured that Channel 5 has been keen to hold talks
with either Sky or Channel 4 about joint selling opportunities, Barnes
is clear that although he feels it should be allowed in principle, it's
not an avenue Channel 4 would have explored. "We (Channels 4 and 5) are
completely separate companies, with different remits. I could make a
song and dance about it, but at the moment I don't choose to. We aren't
talking to them at all. Would we do it? It would have to have been in
both our interests."
So will the TV marketplace pan out differently from the way it has
Steve Platt, the sales director of Carlton, believes not. "I don't think
you will see any change at all in the short term. Channels 4, 5 and Sky
can't change. Flextech Telewest could, but I can't see who they would go
with - they have a very specialist sell. Unless someone is prepared to
get revenue guarantees, the smaller company will always be very
suspicious of knowing that they are getting their rightful share of
Perhaps Flextech Telewest could be a potential new bedfellow for Channel
5 following the ITC's revisions. Mike Smallwood, the managing director
of business and commercial at Flextech Telewest, is enthusiastic about
the potential of getting together with another party. "We are in a
position where we could deal with any of the players outside ITV. If we
could do it in a way that could enhance shareholder value and the people
who work here, then we would look at doing it. I would expect over the
next 18 to 24 months consolidation of ownership of channels in the
multi-channel environment and an accompanying movement to redefine
So are we likely to see Flextech park its sales elsewhere? Smallwood
states: "We would want to do it with some sense of shared ownership - we
wouldn't get out of the business. We would need to consider if there is
a commonality of culture and purpose in a potential partner - would you
get a more powerful sell and could you be more influential within it? We
are considering it seriously."
If Flextech's up for play, what about Viacom? Paul Curtis, the managing
director of Viacom's sales division, Viacom Brand Solutions, points out
that at this stage the media company is unlikely to reverse its recent
decision to pull sales of the Paramount Comedy Channel and Nickelodeon
out of Sky and in-house, to be sold alongside MTV and VH1. "The reason
Viacom went the other way was the ability to offer a much greater
service to the advertiser - bringing all the channels together, being in
charge of their own destiny," Curtis explains. "It's not something we
would look at doing in the short-to-medium term because we've only just
worked out what we could do for ourselves."
So it would appear that if there is to be any change before the issue of
one ITV is revisited, it will be among the smaller players and, even
now, some are not convinced that there are many benefits in it for
It would appear that ITV is split over whether there are benefits to
bringing GMTV in-house, since it is questionable whether the operation
would benefit from being split into a regional sell.
Mike Gull, GMTV's sales and marketing controller, said: "We asked the
ITC to allow us to do what we liked with our sales, so it is us who made
the request. We have the option to joint sell with other people, but
really it's a question of what we want to do. At the moment having a
dedicated sales force doesn't seem to be doing us any harm in a
difficult marketplace where we're doing rather well."
Advertisers are relieved that, for now, the number of sales points is
not set to dramatically change. Bob Wootton, ISBA's director of media
services, says: "With these revisions the worst you could see is ITV as
two, Channel 4, Channel 5, Sky and one other sales point. So there's no
consolidation into three points, which is what could have happened."
Graham Duff, the spokesman on the Future of Television on the IPA's
media policy group, observes: "The ecology of sales in this country is
reasonable - it isn't discriminatory. ITV has a lot of power but the
current split gives a reassuring balance. The individual channels sell
their wares reasonably well."
But there is an air of inevitability about ITV becoming one within the
next four years. Granada Enterprises's chief executive, Mick Desmond,
proclaimed as much at a recent TV conference and the question now is
when, not if. As soon as that begins to surface back on to the agenda,
perhaps there will be less political manoeuvring and more active
consolidation taking place among the other sales points.
STEVE PLATT - sales director, Carlton
He is seen as the tough face of ITV sales and the real driving force
behind Carlton's airtime sales. He is considered by many to be the best
salesman in the marketplace and the best candidate to head a single ITV
sales house, should it be allowed.
SIMON PARDON - sales director, Granada Enterprises
Once famously dubbed "pompous Pardon" he divides opinion as to the
strengths of his real capabilities. It is hard to see him as an equal
co-opponent to Platt if it came to a head-to-head on running a single
ITV sales operation.
ANDY BARNES - sales director, Channel 4
A well-liked figure who is heading a very strong sales team at Channel
4. Buoyed by the strength of the Channel 4 brand, he looks increasingly
like a lifer at the broadcaster. He is one of the least likely figures
to drive change in the sales marketplace.
NICK MILLIGAN - deputy chief executive, Channel 5
He used to sell Thames and has launched and run the sales operation for
Channel 5. He also worked at UK Gold. He is seen as a good all-rounder
although some buyers would question the strength of his team. He has
ambitions to strengthen his position in the market.
MARK CHIPPENDALE - deputy sales director, BSkyB
Sky has never seemed to have placed much emphasis on its ad sales
revenue, relying more on subscriptions. A quiet number two to Peter
Shea, he's a likeable bloke but not an aggressive player. Without the
will of Sky behind him he is unlikely to drive sales forward.
MARK HOWE - sales director, Flextech Telewest
Despite many years in TV sales he is not one of the big players.
However, he's working with a difficult brief of diverse brands and
within his small universe has made an impact on a tough marketplace.
PAUL CURTIS - managing director, Viacom Brand Solutions
A solid number two who is a relatively untested sales chief running a
minnow sales operation which is totally exposed in the tough TV sales
environment. It is not a great time to be establishing yourself as a
standalone sales unit.
MIKE GULL - sales and marketing controller, GMTV
Although he is number two to Clive Crouch, he is the frontman seen by
agencies. He heads a laid-back operation which is an insignificant
player in the TV market. Gull is well-liked but is unlikely to last if
the company merges its sales with either Carlton or Granada.