MEDIA FORUM: Rivals square up as ITV prepares to consolidate - This is obviously an exciting time for ITV. What we tend to forget is that it’s also a period of uncertainty. Will it take its eye off the ball? Could its rivals exploit that?

In almost all of the coverage of the Government’s decision to let ITV consolidate, there has been one central assumption - that this is great news for ITV. And, of course, bad news for almost everyone else Viewers, rival broadcasters, advertisers. Especially advertisers.

In almost all of the coverage of the Government’s decision to let

ITV consolidate, there has been one central assumption - that this is

great news for ITV. And, of course, bad news for almost everyone else

Viewers, rival broadcasters, advertisers. Especially advertisers.



Underlying this assumption is the notion that the television advertising

business is a protection racket. Rackets, naturally, are run by

mobsters, people who exist to turn ruthlessness into an art form.

Everyone suspects that where bullying is concerned, it’s far more

terrifying to face two heavyweights rather than three mediumweights.



Advertisers are said to be scared - witness attempts by the advertising

trade body ISBA to seek a series of reassurances from the network.

Smaller channels such as Channels 4 and 5 are also rumoured to be

discussing ganging together on the sales side.



But what if the assumptions are wide of the mark? Bear in mind that ITV

already has a whole lot of problems. For instance, it hasn’t had a

Network Centre chief executive for a few months now. The prospect of

consolidation has had more than a little to do with that, of course -

what person in their right mind would take on a job that could change

utterly or disappear tomorrow? But it also reflects the fact that the

ITV network is UK television’s smokestack industry - it has nowhere to

go but down. No matter who owns what, ITV’s share of audience is bound

to decline.



And remember the last time there were major changes on the sales

side?



A decade ago it all began in confusion and it ended in scandal, with

huge holes appearing in the trading accounts. Three into two might prove

an equally awkward sum this time around. One way or another, isn’t ITV

likely to take its eye off the ball in the coming months? Can’t rival

broadcasters and agencies find reasons to be cheerful here?



Perhaps, Colm Feeney, the broadcast director of Western Media, says.



But he doesn’t believe that ITV will take its collective eye off the

ball on the sales side - certainly not to the extent that it did a

decade ago.



Its obsession this year will be to bed down whatever structures emerge

from this summer’s manoeuvrings. So, short term, it will just be happy

to get through this year’s negotiation season. In the long term, though,

the new sales points will be ready for tough talking: ’ITV’s game is to

push for greater share of broadcast deals. They might believe that

consolidation on the sales side will help them achieve that. So Channels

4 and 5 should - and probably will - want to take advantage of any

period of uncertainty this year by trying to get their money now. And

yes, if the deal’s good, we’ll do it. National channels are looking to

increase their share too - and they might argue to clients that it will

make it easier to stand up to tough talking from ITV down the line if

they sort out their deals with Channels 4 and 5 and Sky too. And it will

be comforting to clients to be told that they don’t have to worry so

much about the ITV situation because they’ve already tied up the

nationals.’



Is that the way ITV’s rivals see things? Nick Milligan, the sales

director of Channel 5, admits that this year’s deal-making season will

be exciting.



’Most of ITV’s three-year deals are now up for renewal. In 1997, ITV

delivered 61 per cent of adult impacts and 51 per cent of young men.

Today those figures have fallen to 52 per cent and 42 per cent

respectively. At launch we were 4 per cent of adult impacts. Today we

have a 10 per cent audience share.’



Milligan’s point is straightforward. If money follows audience - and,

increasingly, these days it clearly does - then ITV is facing a tough

season, irrespective of ownership and structural issues on the sales

side.



The days when ITV could demand advertisers give the network a certain

share of their budgets, regardless of good or bad audience performance,

are over.



Milligan adds: ’Competition within ITV will still be fierce because

human nature dictates that you look after your own team first. London

weekday versus London weekend will always breed animosity. I would be

fearful of collusion if I thought they liked each other enough to

collude. As for further consolidation, this industry needs competition.

If seven sales points reduce to four, you might as well wire up the

computers. Negotiators might enjoy that environment but there won’t be

any sales people left.’



Nick Theakstone, the broadcast director of MediaVest, points out that

consolidation will bring a complex set of pluses as well as minuses: ’On

the programming side, a consolidated ITV could now argue that cost

savings will allow it to put more investment behind programming - and

certainly in the short term I don’t think there’s going to be much of a

problem about programme commissioning. So I can’t see it taking its eye

off the ball in that respect.



’From an advertiser perspective, it wouldn’t be a good idea for ITV to

act the bully at a time when we’re seeing such big ITV inflation. ITV

peaktime will remain important but, perhaps, people are starting to

learn that you can live without so much of it. You can pick and choose.

Look at what happened with the World Cup - ITV got cocky about how much

people needed it. They’ve scared people off in the past. If there is

consolidation on the sales side, we will see a period when people are

scrabbling about for jobs and the new heads of the new sales points will

be trying to put new teams together. And we will have people selling new

parts of the country. How much of an impact will that have? I don’t know

is the honest answer.’



Andy Barnes, the commercial director of Channel 4, argues that whatever

happens, ITV sales confusion will probably be minimal: ’The situation

now isn’t in any way comparable to the big shake up a decade ago. There

are sophisticated systems in place to control inventory and the way that

the market is polarised, with all the deals being done between October

and February, means that there is less potential for short-term fall

out. As for morale, there might be something in that, but ITV cut out

most of the dead wood a long time ago - most of the people in the

business now are pretty clear about what might happen.



’If ITV is suffering, it’s not because of anything that’s happened

specifically in the past couple of weeks. Channel 4’s sell has always

been a realistic and logical one. We know that advertisers aren’t going

to stop using ITV but we can ask them if they want to keep chasing

expensive ratings or spread their bets a bit more widely. I don’t think

you can say any more than that.’



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