The mooted merger of ITV with commercial rivals Channel 4 and Five has been dubbed unthinkable. In the teeth of possibly the worst advertising recession ever, steady decline in (and increasing fragmentation of) audiences and repeated rounds of job losses, perhaps the idea is all too thinkable. As James Robinson puts it in The Guardian:
ITV is a quoted company with nowhere to hide, and its share price offers a daily reminder of just how bad things could get. It currently stands at 23.5p, less than a fifth of its 2003 flotation price, and could fall further when it announces its annual results next Wednesday, when it is likely to unveil more job losses and cuts in its £1bn programme budget. Saddled with a growing pension fund deficit and watching advertising revenues fall dramatically – they are thought to be down by up to 20% in the first few months of this year – its debt has been downgraded by credit agencies. The message to the government is an implicit one, even if ITV wouldn’t dare to utter it aloud: act now or we could go bust.
To which, if I were Culture Secretary Andy Burnham or his special advisor, I would be tempted to respond: so what? ITV has long had the smell of feet about it. ITV companies spent the 1990s focusing on merger and acquisition activity rather than viewers. The network made a complete mess of its involvement in digital platforms at the turn of the decade, with disastrous results for the Football League as well as ITV. Along the way ITV made the still-baffling decision to buy Friends Reunited, the once-promising forerunner of today’s social networking sites, indulged in extended public whining over the unpredicted commercial success of Channel 4 when it started selling its own airtime in the early 1990s, and has successfully lobbied for progressive relaxation of its regional and PSB obligations.
Meanwhile anyone with eyes to see could see the contours of the digital landscape emerging: a land where audiences would be increasingly spread across several hundred channels, where ITV1′s audience share fell below that of combined non-terrestrial channels over five years ago, and where subscription surpassed advertising revenue around the same time. So Burnham might well follow up his “so what?” with “why does ITV’s current situation come as a surprise to nobody but ITV, and why did you fail to take more productive strategic action five, ten or 15 years ago?“.
Now broadcasting and competition policy obviously can’t be punitive in motivation, however tempting and well-deserved that may be. We shall hear a lot in the coming weeks and months about the risks and benefits of the two options being floated by ITV chairman Michael Grade: merger with C4 and Five, or to change C4′s funding basis so that it no longer competed with ITV for advertising revenue. As we see, ITV is hardly in a position to dictate its terms.
But what would British broadcasting, production and advertising markets look like if ITV were no longer around? After all, its original mission, to provide viewer choice and competition for the BBC, became irrelevant long ago. Jobs will be lost whatever happens: the status quo guarantees them, and both ITV’s preferred options depend on them. If, however, ITV’s remains were to be donated for harvesting, with the BBC, C4 and Five catering to audiences and advertisers on the basis of redrawn, and presumably stricter PSB obligations, then the undoubted demand for original programming would still need to be fed, and the new premium placed on TV airtime would bring demand and supply more in the direction of equilibrium than they ever would in the presence of ITV. The BBC’s significance in the future broadcasting environment will be greater than now whatever happens, and Channel 4 is surely a more vibrant and worthy survivor of the current balloon game than the wastrels at ITV. If we’re being invited to think the unthinkable, then let’s do just that.
Filed under: Media economics, channel 4, five, itv, public service broadcasting
