Merged ITV Vows to Put Advertisers First

06 January 2004

Forthcoming UK television giant ITV plc is promising "a different way of doing business" by putting advertisers' needs first.

The company will be created by next month's completion of the merger between Granada and Carlton Communications, dominant shareholders in the existing ITV network. After years of in-fighting between the different ITV franchisees, the combined Carlton/Granada hopes to become a more commercially driven unit.

According to Charles Allen -- chairman of Granada and chief executive-in-waiting of ITV plc -- this will involve considering the requirements of advertisers at the very start of the programming process, with scheduling paramount.

"It's a much more analytical approach, in which the structure of the schedule becomes crucial," Allen declared.

An early example of this new focus was seen at the recent climax of the Rugby World Cup. Around 82% of the UK television audience watched England beat Australia in the final, and -- in a change from traditional practice -- ITV inserted a commercial break straight after the final whistle, delivering these viewers for advertisers.

There is a clear benefit to ITV in changing tack. To get the merger past regulators, Granada and Carlton had to agree to strict ad sales conditions. Under the new rules, airtime prices will be related to 'commercial impacts', the measure of how many viewers watch a TV ad.

"For the first time I can get everybody to focus on one thing -- commercial impacts," Allen continued. "Previously, ITV had many different measures of success. Our production division got rewarded if they got a commission … and until last year our network centre was rewarded on their market share against the BBC."

However, Allen insists that this new emphasis will not lead to downmarket programming designed solely to boost ratings. He believes higher-quality fare is needed to attract the ABC1 demographic craved by advertisers.

In a bid to capture more of this market, the merged ITV plans to launch a new channel, ITV3, featuring drama from the previous five years. The broadcaster hopes to build a family of stations as the number of homes with multichannel TV rises.

Other plans include campaigning to boost television's share of total adspend, while lobbying for a reduction in the £475 million ($857m; €677m) ITV pays in spectrum, licence and other regulatory fees. The latter issue is particularly important to Allen, who plans to allocate 40% of the new company's management time to regulatory and legislative affairs.

• Separately, it has emerged that Carlton and Granada may still have to pay other franchisees in the ITV network for using its name.

SMG, owner of two Scottish ITV stations, failed last year to get a High Court injunction preventing the merged company from taking the ITV brand [WAMN: 21-Nov-03]. However, documents recently filed by Granada and Carlton ahead of the deal's completion reveal ongoing talks about the issue.

The two firms claim the ITV trademark is owned by ITV Network Ltd, in which they are the biggest shareholders, giving them rights to the name. However, the documents reveal that they have "undertaken to the Court that, if it should be subsequently determined that this use of the trademark is not permitted, they will pay compensation for what would in those circumstances be the additional right to use the trademark in the company name of ITV plc."

Compensation would be paid to SMG, Ulster Television and Channel Television.

Data sourced from: Financial Times; additional content by WARC staff