ITV was in a bullish mood yesterday, reporting a return to the black and predicting a revival in the advertising market. Hot shot chief executive-elect Adam Crozier will join from Royal Mail at the end of April, when he will launch a strategic review that will solve the free-to-air broadcaster’s troubles. The worst is over. Sound too good to be true? That’s because it is.
Depending on how you count, ITV’s performance wasn’t much improved. The board has decided to change its accounting methods, using a new formula for adjusted pre-tax profit that excludes non-cash items like pensions interest and the mark to market value of swaps. The firm argues that management has no control over these factors, which is fair enough, but on the old measure adjusted pre-tax profits actually fell 43 per cent, from £167m to £94m.
ITV’s share of commercial impact, or Soci, is also down so far this year, suggesting it is losing ground to rivals amid savage cuts on programming. Apart from blockbusters like X-Factor, I’m a Celebrity and Coronation Street, the broadcaster has little content in the cupboard. The recent round of swingeing cuts might have helped it book a profit for 2009, but could hurt revenues down the line.
REASONS FOR CHEER
There is some good news. It seems as though chairman Archie Norman has ruled out putting parts of ITV behind a pay wall, a strategy that one-time chief executive candidate Tony Ball was said to favour. ITV spent just £1bn on original programming last year, compared to £1.75bn at Sky and £2.33bn at the BBC. As it stands, its output simply wouldn’t command a premium.
BBC PLAN TOO FEEBLE
Mark Thompson’s plan to close radio stations 6 Music and the Asian Network, and to reduce the budget of the corporation’s website by 25 per cent, is unlikely to pacify an incoming Tory government. Instead of giving the £100m saving back to licence-fee payers, the director general plans to pump the cash into “high quality” programming (doesn’t the Beeb already invest in this?). He will also move £500m out of existing budgets, giving him a £600m war chest for the project.
It’s a strange strategy, one that almost invites the Tories to cut the BBC’s spending bill by £600m. That said, it does signal a shift in direction. Thompson is essentially saying that the Beeb can’t be expected to provide whole stations for minority groups, and should instead incorporate content made for them into mainstream schedules.
He should have gone further, of course. BBC Alba, the Scottish Gaelic language digital television channel should be closed, as should BBC Three, which has a £115m annual budget.