Media Forum: Are ITV plans an alarm call?

Should ITV's merger proposals rattle the industry, Alasdair Reid asks.

So it has come to this. By rights, ITV's Armageddon proposal should have been wildly entertaining. Last week, the results of some executive blue-sky thinking, namely that ITV merge with both Channel 4 and Five to create one huge commercial broadcasting corporation, began filtering out of the office of the executive chairman, Sir Michael Grade.

In the normal course of events, we might have gleefully seized on such a notion as an excuse to imply that the poor old thing was surely in danger of losing his marbles. Or that his executive team had been partaking of a recreational smoking mixture.

But these are extraordinary times. The proposal would, of course, comprise the biggest shake-up in the UK TV business since ... well, the start of commercial broadcasting itself. And clearly, any sort of triple alliance of this nature would pose huge cultural and regulatory problems.

But desperate times call for desperate measures. ITV, one could argue, faces a scary future. Channel 4 is talking about co-operation with the BBC, while Five is part of a powerful multinational in the form of RTL.

ITV's friends and well-wishers tend to be based in the investment community of the City of London. And with friends like these, it has every right to feel nervous. So perhaps we should welcome the outrageously exotic nature of Grade's proposals.

Because they might help drive home the point that, if we don't embrace a bit of radical thinking while we still can, we could be on the verge of losing mainstream commercial broadcasting in this country, once and for all.

Should we be taking this triple alliance proposal seriously? At one level, clearly not, Bob Wootton, the director of media and advertising at ISBA, argues: "There's a competition issue, a plurality issue where viewers are concerned and a commercial issue where advertisers are concerned. So I don't exactly think ITV could count on ISBA's support for a proposal like this. But we've said this before and we'll say it again - the real question at the heart of this is the current status of the BBC and the effect it's having broadly on the commercial sector. Any proposals that don't confront that directly are just basically moving the food around the plate."

And that's pretty much how Jim Marshall, the chairman of the IPA's Media Futures Group, sees things. He comments: "I can't believe that Grade or anyone at ITV is serious about the details of this proposal. Those three broadcasters represent three-quarters of the market. So this isn't a practical proposition. You can't merge a not-for-profit governmental organisation (Channel 4), a public limited company (ITV) with a multinational conglomerate in the shape of Five's owner, RTL. Airtime market considerations aside, it just wouldn't work in terms of cultural fit. But I think the timing is interesting - and I think it's possible to interpret this as ITV giving the Government and the regulators a wake-up call."

However, Marc Mendoza, the chief executive of MPG, is rather less sympathetic. He explains: "Yes, this is clearly a case of Grade shaking the tree. He's had a victory over BSkyB (which will have to sell its stake in ITV) and most likely is about to have one on contract rights renewal.

"He's been emboldened. Now he's trying to frighten people that the demise of ITV is nigh unless he's allowed to do what he wants. To me, this is diverting attention from a product that will struggle if its real problems aren't addressed."

But Nick Theakstone, the UK chief executive of Group M, says there's nothing wrong in trying to think the unthinkable. He concludes: "I think it's valid for ITV, as market leader, to consider all the options. I can't see why it shouldn't put forward proposals - even ones that are way beyond what anyone can imagine happening today. In fact, you have to admire ITV for being broad in its thinking and for looking beyond 2009."

MAYBE - Bob Wootton, director of media and advertising, ISBA

"We're in a deep recession at a time when the intervention of a publicly funded BBC is at its most potent. Until that is addressed, we shouldn't be surprised if the commercial sector's proposals don't always add up."

MAYBE - Jim Marshall, chairman, IPA Media Futures Group

"The message would be that the model as it exists for terrestrial commercial broadcasters doesn't work now and it won't work going forward. There won't be enough ad money around to sustain it. So you can see why ITV is saying this."

NO - Marc Mendoza, chief executive, MPG

"ITV needs to survive as a business and it's giving itself a fair chance where its digital strategy is concerned. It still has a big pile of money coming in - let it make ends meet."

MAYBE - Nick Theakstone, UK chief executive, Group M

"Everyone's in a tough place right now and I think it's clear we'll see structural alterations in the media marketplace. I don't think anyone doubts there will be restructuring in newspapers and that will probably happen in TV too. The landscape will change."

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