BSkyB Could Bring Down ITV, Warns BBC Ex-Chairman

14 June 2004

Former BBC chairman Gavyn Davies (who fell on his sword earlier this year to deflect the full force of the Blair administration's fury over the BBC's allegations of "sexing-up" a dossier on Iraq's phantasmal WMD) warned last week that ITV is heading for the financial rocks, driven by BSkyB's increasing erosion of its audiences.

Lecturing in London, Davies reverted to his pre-BBC persona (chief economist at investment bank Goldman Sachs) with some percipient crystal-ballgazing.

He noted that ITV's business model is currently under siege, its falling ratings undermined by multichannel rivals. Plus the hobbling of the broadcster's freedom to increase ad rates for the next three years -- imposed by the Competition Commission's 'with strings' approval of its recent merger.

This contrasts with soaring annual revenues at the Murdoch family-controlled BSkyB. These now exceed those of the BBC, which topped £3.53 billion ($6.42bn; €5.34bn) in the 2002/3 financial year.

Opined Davies: "Sky is becoming a colossus compared to ITV, which now exhibits a business model which is clearly under threat." The terrestrial commercial broadcaster, he said, may have no option but to sell to a foreign predator.

ITV, however, insists it is adapting to these market conditions: "ITV1 remains unique in the commercial market in delivering mass audiences that advertisers want to buy into. ITV has responded to the growth of Sky and multi-channel television by new services such as ITV2. The market is changing, but ITV is changing with it."

Turning to the BBC, Davies dismissed the case for funding by voluntary subscriptions, arguing this would exclude some 25% of the UK population and thus destroy the corporation's essence as a universal provider of public service broadcasting.

Instead, he supported a license fee subject to inflation-geared increases: "No other public service," Davies averred, "not the health service, not the schools, not the army -- and definitely not the police -- would ever contemplate accepting a decade-long settlement in which its income is frozen in real terms."

Data sourced from:; additional content by WARC staff