Media Forum: Has ITV uncertainty hit trading?

Are question marks over ITV's future affecting deal-making, Alasdair Reid asks.

To the casual observer, it might appear ITV has entered this year's autumn deal-making period in a horribly weak position. As advertisers, media agencies and TV sales bosses come together to thrash out deals for the whole of 2007, they do so against a backdrop of lingering uncertainty where the market-leading commercial broadcaster is concerned.

While Michael Grade's appointment as the executive chairman at least ends the uncertainty over ITV's leadership, this time next year, the broadcaster might be part of a larger media conglomerate - a UK cross-platform ntl:Telewest Virgin Mobile digital three-ringed circus, for instance. Or part of a pan-European network of commercial broadcasters owned by RTL.

Or alternatively, it might be in the doldrums, hamstrung by a mischievous minority shareholder, BSkyB, and unable to acquire or produce the sorts of programming it needs to face the future with confidence.

After all, its performance this year in audience terms is not exactly what you would expect from commercial television's market leader. On the other hand, its alliance with Sky might lead to a new golden age in UK-based programme production, and they might bid together for an amazing array of sporting and film rights.

So, is all of this having an impact on deal-making? Is ITV, for so long the market bully, now getting sand kicked in its face? True, if an advertiser is signed up to Contract Rights Renewal, room to manoeuvre is limited on both sides of the buyer-seller fence.

But Channel 4 is seeking to redeem its 2005 trading performance (when it struggled to deliver on its deals) at a stroke by hiking its rates by 5 per cent. If the channel is successful, that, surely, would further damage ITV's ability to meet its targets on its digital channels, ITVs 2, 3 and 4.

Ian Armstrong, the customer communications manager at Honda, says even if the ownership of ITV changed overnight, the possible impact on advertisers would be hard to predict - and the effects wouldn't manifest themselves in weeks or even months. "At this stage, I don't get the impression that there are a lot of worried calls being made across town. We will continue to operate within CRR," he says.

And he adds: "Whatever happens, we need a strong ITV - not just as regards ITV1, but the digital channels too. Any publicly quoted company can change hands, but that in itself shouldn't drive the decisions of advertisers - unless the change in ownership impacts on the output of their channels."

All of that is true, Steve Platt, the head of media at Aegis, concedes, but it might also be hard for ITV sales teams to keep their eye on the ball. He argues: "I went through several takeovers when I was at ITV as the network consolidated from 15 companies to one, and the attitude you take as a sales bloke is that whatever you do can't influence what's happening at that level. You have to try to ignore the corporate developments.

"But it isn't the best situation from a motivational point of view. There will be people questioning whether Sky's involvement makes ITV a lame duck - and, of course, the sales teams of rival broadcasters are going to come in and try to stir things up."

Nick Theakstone, the chief operating officer at Group M, agrees we might see the odd instance of posturing out there in the market this season, but he doesn't think it will have much impact on experienced negotiators.

And who's to say, he adds, that things are looking bleak for ITV. He explains: "I'm sure you could turn it round and argue that the Sky situation is potentially positive in terms of the joint initiatives they could undertake or in their ability to block rival bidders for things like sporting rights. That could be a powerful situation. It all depends how friendly they intend to be."

And Chris Hayward, the head of investment at ZenithOptimedia, agrees that ITV's situation is not noticeably different compared with this time last year. He argues that all broadcasters are on the back foot this year, given the fact that the whole market is down year on year. All broadcasters are, or should be, worried.

He concludes: "Last year, other broadcasters saw the CRR situation as a great opportunity for them against ITV. This year, because of overall revenue decline, they all view the future with a little more uncertainty."

NO - Ian Armstrong, customer communications manager, Honda

"With any publicly quoted company, a change of ownership is a continual possibility, but you will only get yourself into a spin if you try to second guess that. I don't think we will have any problems getting through the negotiation season."

MAYBE - Steve Platt, head of media, Aegis

"Many on the sales side at ITV have been through similar periods of speculation, but you can't ignore the negative aspects. It's not nice feeling that you're no more than a pawn being pushed about the board."

NO - Nick Theakstone, chief operating officer, Group M

"I can't see ITV being affected significantly, even if something happened tomorrow. People are in the market putting their own spin on things, but we're all too long in the tooth for that to affect us."

NO - Chris Hayward, head of investment, ZenithOptimedia

"I don't think the current situation, particularly the time taken to find a chief executive, decreases ITV's viability. It won't be more of a target than last year, and the mechanism for changing your relationship with ITV1 is the same."

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