Can Grade bring the Midas touch to ITV?

Nine months after his arrival at ITV, executive chairman Michael Grade tells Steve Barrett why confidence within the UK's biggest commercial broadcaster is growing.

Can Grade bring the Midas touch to ITV?

Michael Grade is a big fan of Alan Pardew, manager of his beloved Charlton Athletic, who is in the process of doing a serious turnaround job at the football club. When we meet to do an interview for Media Week TV, Grade is bubbling with excitement at the prospect of Charlton taking on Delia Smith's Norwich City at The Valley that evening.

Pardew took over the reins at the beleaguered football club on Christmas Eve last year, a week before Grade started his new role as executive chairman of ITV, but not in time to save the Addicks from relegation from the Premiership.

Grade believes Pardew would have kept the club up if he had been installed earlier, and he hopes that he has come on the scene early enough to complete his own turnaround task in awakening the sleeping giant that is ITV.

Nine months into the job, the signs are promising. Grade's arrival immediately lifted the mood at the broadcaster, and commercial impacts in the summer and projections for the autumn suggest hard data is starting to back up the fluffier, feel-good factor Grade engenders wherever he goes.

"We are marginally ahead of where I dared to hope when I joined," says Grade, sporting his trademark red socks. "The job was to turn ITV around. At ITV1, that's beginning. We are on the launch pad, but not in orbit yet. There is still a long way to go."

Grade took on an ITV that had lost more than £500m in ad revenue since 2000, which can be partly attributed to an advertising recession, the contract rights renewal mechanism and the growth of digital channels. It was also, however, caused by the fact that the channel's programmes simply weren't good enough.

Grade has achieved one concession already, with Ofcom finally agreeing to have a look at CRR. He accepts that some will be nervous of a return to the bad old monopolistic days of ITV as a non-yielding battering ram, doing and charging what it wanted.

"I understand the concerns and that people have long memories in this business," he says. "ITV has a long history of being somewhat arrogant in its position."

His position is less the "abolish CRR, end of story" one he inherited. Rather he acknowledges there are problems with CRR causing side effects no one anticipated. His stance is "let's amend CRR; let's find another mechanism that will give advertisers the comfort that ITV can't abuse our position", but one that also lets ITV get rid of the "commoditisation" of its premium product that he believes is stifling innovation.

"The mutual interest between advertisers and ITV is our ability to deliver big audiences with great British content," he explains. "In their heart of hearts, advertisers have to have sympathy for a business that's unable to get a fair market price for its inventory."

Closer to home, Grade is determined to make a lasting change to ITV's corporate culture. At the recent Royal Television Society Convention in Cambridge, business guru Allan Leighton ran a session on rebranding a business and making it successful, suggesting companies in turnaround phase shouldn't be afraid of creating a cult, just as Leighton did at Asda, even stretching as far as a company song. Grade was also in Cambridge and is candid about the challenge he faces, but believes the UK's biggest commercial broadcaster is fast losing the "beleaguered" tag it used to attract from the press.

"ITV works in silos," he admits. "When a business is struggling, people work in silos. You can't go through what this business has been through in terms of change, challenge and poor results without the natural institutionalised tendency to keep your head down, stick to what you know, don't take a risk and don't talk to the other 'bastards' in the organisation because they're out to do you in."

Leadership style

Paranoia sets in, he observes, and it's hard to change that culture. His recipe for turnaround is a dynamic leadership style and a bit of success, and he says he can feel the confidence in the organisation beginning to grow.

"Not everyone's singing from the same hymn sheet yet," he adds. "They will be, though. But you can't force it. They've got to feel it and they've got to want to be part of it."

The thought of ITV stalwarts Gary Digby, Simon Lent and Gary Knight joining colleagues such as Nicky Buss and Simon Shaps in a company singsong every morning might be an entertaining prospect for some, but Leighton's suggestion is not one Grade will be instigating any time soon - although apparently there is a video of some of the senior ITV crew singing Always Look on the Bright Side of Life in existence somewhere.

Grade's new mantra is a "united ITV", with improved relationships and co-operation between the different parts of the company, which he wants to operate as a single unit. ITV's five-year plan, released a fortnight ago, acknowledges that people feel divided from the rest of the company and that different parts seem to be working against one another, which communicates itself externally as well.

"There's a growing realisation within ITV that the old days of answering the phone and saying 'no' and putting the price up are gone," says Grade. "We have to engage and be creative. There's a hunger out there from advertisers to talk to the media owners."

Grade says this is where Buss and her creative solutions team come in, though he is quick to point out this was all work that departed commercial director Ian McCulloch and managing director of ITV Customer Relations Gary Digby put in place before Grade arrived.

This might raise some eyebrows, given that McCulloch seemed to be eased out earlier this year after 27 years at ITV, sensing his face didn't fit in with the new regime. McCulloch was heavily associated with previous chief executive Charles Allen, but Grade won't be drawn on this. "Ian made his decision that he wanted to move on, and it was his decision," he says.

Grade has been in a constant dialogue with media agencies and advertisers since he came on board, enjoying the process of kicking ideas around and talking about "how we can create value together". He was heartened when top-level advertisers contributed positive testimonials for his recent strategic review presentation, and believes the change process is starting to be noticed.

Alan Bishop, chief executive of the UK's third-biggest advertiser, the Central Office of Information, said: "There has been more effort of late to treat the advertiser as a genuine partner whose needs should be listened to." And Martin Pugh, marketing director at Camelot, advised: "Be brave. Be creative. Do the difficult stuff. Then I think the journey will be a good one for ITV."

But while Grade has made a good start in turning round fortunes and perceptions, there are still many who want to see more concrete evidence of a shift in attitudes at ITV, a sustained pick-up in creativity and high-quality programming, and audience figures to follow.

Developing programmes

Grade has placed an emphasis on developing programmes and genres with big potential, shifting investment from one-off dramas to long-running drama and popular entertainment formats. He wants all ITV programmes to have at least two additional sources of revenue. He refuses to believe the days of ITV classics such as Morse attracting 15 million viewers in peak time are gone forever, pointing to programmes such as Britain's Got Talent and upcoming conspiracy thriller Mobile as the way forward.

"Of course it's (still) possible. With Britain's Got Talent, we ended up with 12 million on the last night," he points out. "And for the right dramas, such as Prime Suspect, we attract huge audiences."

Some are less enamoured with the new schedules. One Media Week TV viewer, Simon Prendiville, broadcast account director at Universal McCann, asked Grade: "Do you weep when you see some of the dross ITV puts out on its peak schedule? And do you think Holly and Fearne Go Dating is truly scraping the bottom of the creative barrel?"

Grade takes Manchester United manager Alex Ferguson's tack, saying he never criticises individual shows in public, but admits: "There's still some dross that was commissioned a long time ago. We keep weeding the garden, but even if we're firing on all cylinders and everybody's talking about ITV, there will still be some dross, because there always is. The trick is to keep that to a minimum."

Grade ended the day of the Media Week TV interview a happy man, as Charlton defeated Norwich with two penalties in the last five minutes. It's the sort of result that wins teams titles or gets them promoted. Almost one year in to his three-year project - he will leave by 2010 and the board will begin a search for his successor some time before that - Grade will be hoping he can mirror Pardew's Midas touch at Charlton in the two years he has left to make his vision for ITV a reality at the country's newly rejuvenated top commercial broadcaster.

- The full version of this interview can be seen live on MediaWeek.tv from today


Strategic purpose: To deliver mass audiences with a quality profile

ITV has a peak-time plan for its flagship channel. The 9pm slot has been identified as a problem area. ITV hopes to attract increased advertising revenue for the channel by dramatically improving this slot's output. There will be more 60-minute dramas, comedy, football and US-acquired series for late peak and fewer repeats.

Objective: To become more upmarket and win back the younger group

Proposition for viewers: To deliver stories that unite people

Strategic purpose: To recruit light ITV1 viewers

ITV's largest digital channel is to receive an additional £20m of investment as it continues to chase Five for 16-34 male viewers. The aim is to become the third commercial network for this age demographic. The investment will be used to produce original peak-time content and to create an improved profile and audience share. ITV predicts full payback of investment by 2010.

Objective: Increase the volume of 16-34 viewers

Proposition for viewers: To create a fun space to be young

Strategic purpose: To retain viewers through premium drama

ITV aims to increase the volume in the younger (36-44) ABC1 audience, with this channel set to benefit from the new ITV1 drama slate and improve its collection of classic and contemporary dramas, as well as unique commissions and US series outputs.

Objective: Increase the volume of ABC1 viewers

Proposition for viewers: To tell stories beautifully and engage audiences with fresh material

Strategic purpose: To recruit men to ITV

ITV aims to not only maintain its male profile, but also attract many new male viewers. It continues to target the 25-45 male demographic - the viewers ITV is most keen to recapture. The channel's share of commercial impacts has been up recently and ITV says the channel is finally tuning a corner.

Objective: Maintain male profile, increase volume, and go younger

Proposition for viewers: To create a place where men can be men

ITV aims to increase its online revenue to £150m by 2010. Grade said the potential of the recently revamped site will be driven by the popularity of its content. He added that the video clip of Paul Potts wining Britain's Got Talent has been viewed 30 million times on YouTube, proving ITV can deliver compelling content on both TV and online. ITV is talking to content aggregators to see how to make money out of this.

Emma Barnett

ITV say they will travel with their audiences and advertisers to become a leading exploiter of free, popular content online, in order to maximise online revenue potential.


... content

At ITV, I can mentor. I don't think Simon Shaps has ever had anyone to talk to who really under-stands the creative business. I can talk to the talent for him if he wants me to. All the old skills are coming back - the silver tongue.

... Dawn Airey, ITV director of global content

Dawn has the respect of the creative community; she's a brilliant leader; a great manager. She's very commercial and we've put global production, domestic production and our exploitation and distribution business under her in a bid to double those revenues in five years.

... partnerships

We're happy to partner with anybody if it benefits us. Sky has a tremendous position, a very success- ful business, but there's room for two in any market. We've backed Setanta by partnering with it on the FA Cup deal at the beginning of this year.

... Sky

I don't get calls from James Murdoch saying, "what are you doing; why are you doing this; why are you doing that; or can you do this please?". That just wouldn't happen. But if you've got a major competitor as your biggest shareholder, they could block something the majority of shareholders think is in their interest.

... James Purnell, culture secretary

He understands the media. He's very articulate and extremely clever, with a real sensitivity and understanding. He knows the issues in broadcasting. He's worked in the media. He's very good news for the sector.

... Google

Google wants to eat everyone's lunch: your lunch, my lunch, everybody's lunch. I'm not arguing for greater regulation for Google - I'm arguing for liberalisation of a regime that owes more to the monopoly of the 70s and 80s than it does to the reality of the market in 2007.

... digital

Friends Reunited is a different model to Facebook. It is very much in the sweet spot of where the web is going. The likes of Facebook are very successful, but they're trendy. They're cool today, but somebody will be cooler tomorrow. They'll be dead in the water. Friends Reunited will always be there.

... Channel 4

If there were two routes open to Channel 4 to survive, the best one would be to carry on as it is - the model is brilliant. If it is unsustainable and the alternative is to take public money or go for privatisation, you would see more of C4's founding spirit in a privatised organisation.

... the future

I've seen the plans for 2008 - much depends on the execution of a lot of the new shows coming in next year. They won't all be hits, but hopefully a lot of them will and I would absolutely expect us to go on improving.