With a whimper 

1 September 2001 tbs.pm/1700

ITV has been facing some major problems recently and has not been coping very well with them. ITV have had to contend with the collapse of ITV Digital, falling revenues from advertising, low audience figures against BBC-1 and a greater than average number of new programme failures including some very high profile ones such as “Shafted”.

One of the reasons why ITV’s fall has been so bad can be traced all the way back to the creation of Independent Television in 1954. The Independent Television Authority was empowered to create more than one commercial network, using additional licensed programme providers. Politics – and the GPO – ensured that enough channels for only one commercial network were made available. These days, such an arrangement with additional programme providers licensed for ITV would undoubtedly have seen more of the old franchisees become production companies, and also some good companies that never quite made it to being franchise holders, providing programming. It would also make for a more competitive ITV in terms of programming.

Another reason why ITV is in crisis goes back to the 1990 Broadcasting Act. This liberalised the laws on ITV contract ownership, allowing franchises – and the companies that owned them – to be bought and sold like a commodity. Ironically, this was a bad idea for the same reason that lack of additional licensed programme providers was unhelpful. Instead of having a competitive ITV with 15 companies and the threat of losing their franchise if they didn’t perform up to scratch, you now have just 5 companies, who know their licences are safe, and are therefore less competitive, challenging and satisfying in terms of programming.

A third reason lies in the relationship between ITV and Sky. In 1998, ITV decided not to launch on Sky Digital, despite the fact that the BBC and Channels 4 and 5 were to appear on both Sky Digital and ONdigital. The digital terrestrial platform, latterly know as ITV Digital, is owned by Carlton and Granada, the two biggest ITV companies. Granada have some history with Sky, having invested in British Satellite Broadcasting, and thus gained a shareholding in the merged entity. Carlton had channels of its own that were restricted to cable.

Carlton and Granada felt that ONdigital would need an advantage over Sky, and ITV would give them that advantage. So ITV and the new ITV2 failed to appear on digital satellite. This move was to prove costly, with many millions of pounds in advertising revenue missed because of this one move. By the time ITV1 and 2 launched on Sky Digital the damage had been done in terms of lost viewers.

A final reason lies in the fact that ITV Digital always looked to compete with Sky Digital. They shouldn’t be competing at all. ONdigital was the only licensed digital terrestrial pay-TV provider, and Sky Digital was the only satellite one. In theory, they shouldn’t have been competing with each other as they were seeking two different markets. ONdigital’s initial advertising emphasised the competition with Sky – leading many people to remember the Sky/BSB and even VHS/Beta wars of the 1980s.

The crisis at ITV comes down to competition. Sky had no real competition after their merger with BSB, whilst ITV was less competitive because the number of franchisees had dropped from 15 to 5. Because the franchises were no longer being seen as under there was no pressure on ITV to perform.

This is a crisis of ITV’s own making. They wanted the ability to merge down into one national broadcaster. They wanted the franchises to be easier to renew, therefore creating less pressure, and supposedly more time for increased investment. They wanted the greener grass on the other side of the regulation fence. Only after achieving this could they become international players able to take on the Bertelsmanns and Time Warners of this world.

Now ITV have got what they wanted – more or less – it turns out to be not what they needed and has left them with a bad taste in the mouth. They now seek to blame the BBC and Sky for not playing fairly.

To undo the mess ITV have made for themselves would require going back to being more regulated environment. They would have to resume being a commercially funded, not commercially driven, public service broadcaster. They would have to cut down the amount that is paid to shareholders and start re-investing in the viewers.

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