New ITV deal hit ABC, ATV and Thomson

BY OUR CITY EDITOR

THE new ITV contracts, which come into effect in 13 months' time and last until 1974, embody some drastic changes for the programme companies. The precise proposition is unclear at the moment and will remain so probably until the new contracts come into force, but it looks as though the profits of both ABC and ATV will be adversely affected - the former particularly.

The one regional quoted company which is a casualty of Lord Hill's changes is TWW, which loses its contract to the Harlech consortium. This is not, however, quite as serious as it sounds. First, because TWW is the most widely diversified of the regional companies, with about a third of its profits coming from outside television; secondly, because it will still remain in television to a lesser extent, with up to 40 p.c. of the non-voting shares to be allocated by the new consortium to TWW.

The Thompson Organisation's stake in Scottish Television, amounting to 55 p.c. of both voting and non-voting shares, is to be reduced from 55 p.c. to 25 p.c. This is a serious blow for Lord Thomson. What it means in effect is that the Thompson Organisation is exchanging pre-tax profits of GBP565,000 from Scottish TV for a trade investment in the same company which will provide a gross dividend of only GBP120,000, no laughing matter considering Thompson's barely adequate cash flow at present.

ABC has not been successful in its application for the Midlands area. Instead it is being invited to combine with Rediffusion to provide a week-day service. This will mean a loss of revenue. Former net advertising revenue amounted to about GBP7.8 million a year. Sharing the London station with Rediffusion means a net revenue of about GBP4.5 million. But of all the companies A B Pictures is the best placed to withstand a minor disaster.

ATV has got the Midlands in place of London at weekends and the Midlands on weekdays. This, too, involves a drop in revenue - from about GBP10.8 million now to something in the region of GBP9.7 million, though there will be cost advantages from operating in one area.

Granada is unaffected, with contract for Lancashire intact. Also unaffected, with TWW's exception, are the regional companies.

The Daily Telegraph (in 1967 still called The Daily Telegraph and Morning Post) is now Britain's biggest-selling broadsheet daily, owned by the Canadian-born Conrad Black.

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This article, by the Daily Telegraph city editor, focuses on the financial aspects of the 1967 changes, and notes the general horror with which the city as well as ITV greeted the many changes imposed by Lord Hill's Independent Television Authority.

The Telegraph holds concerns as to the future of Associated British Corporation and its parent company Associated British Picture Corporation, feeling that it has come off as the loser in the merger with Rediffusion. In fact, ABPC was to be swallowed up by Thorn-EMI shortly after, and the 51% of the new Thames Television was to be a goldmine (and bear the marks of ABC's personality through the number of staff and management bequeathed to the new station). It is interesting how the Telegraph, uniquely, believed that ABC would have preferred the Midlands 7-day contract to London weekends. In fact, according to the ITA's Brian Sendall, ABC had seen London at weekends to be the jewel and the Midlands as a poor second. The ITA had almost (but not quite) made it known that ABC was a shoe-in for London. The London Television Consortium (later LWT) put paid to that with an application that dazzled the ITA as well as most media watchers of the time.

The paper is similarly concerned with the fate of ATV. ATV itself rather begrudged the loss of the London (weekend) contract, although seven days in the Midlands later turned out to be more profit making than ATV's ideal contract of just London at weekends.

The city editor tries to bring hope to TWW. Of his two predictions, only the former - that of diversification - was to come to pass, but the name TWW was to disappear as if a trap door opened below it. At least one of its diversifications is still well known today - Dolland & Aitchison, the High Street opticians. The 40% of Harlech never happened, although the consortium offered it. TWW, suffering from a large - and very public - sulk, turned down the offer on the advice of its bankers. It was later to regret this when Harlech started its 'licence to print money'.

From a northern England point of view, the assertion that Granada was 'unaffected' with its Lancashire contract intact is disingenuous. The north was affected, losing ABC on weekends (as in the Midlands), but also losing Granada itself to the east of the Pennines, with the birth of Yorkshire Television. Granada as a company was actually benefited, finding itself with the contract it originally applied for in 1955, and freed from accusations that it was failing to serve the east of 'Granadaland' effectively. In later years, Granada would find that that particular mud stuck, when it faced criticism of its coverage of Liverpool against the larger Manchester. But that is a story in itself.