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Last Updated: Tuesday, 28 November 2006, 12:57 GMT
Can Grade turn around waning ITV?
Analysis
By Robert Plummer
Business reporter, BBC News

ITV logo
ITV's main channel has lost more than half its audience in 15 years

Michael Grade's channel-hopping move from BBC to ITV gives him the tough task of turning around an institution that has been in remorseless decline for more than a decade.

The ITV channel has been on UK screens since 1955. But ITV plc, the company which Mr Grade will now run as executive chairman, did not come into existence until February 2004.

As Britain's largest commercial broadcaster, it now represents all the former ITV regional companies in the UK except Scottish, Grampian, Ulster and Channel.

Mr Grade began his TV career at one of those vanished companies, London Weekend Television.

He has described ITV as "one of the great British media brands" and reckons that "the chances of turning [it] round are very high".

"[Mr] Grade may well... sharpen up the ITV programming output
Alex DeGroote, Panmure Gordon

But the firm's flagship channel, now known as ITV1, has already proved a turn-off for large numbers of British viewers.

In the early 1990s, it could still boast an audience share of more than 40%. Yet as multichannel television became more popular, that percentage shrank steadily.

Now ITV1 has a share of about 20% - less than half of its total just 15 years ago. Other established channels, including BBC One and BBC Two, have also lost audience share, but not to the same extent.

Digital debacle

ITV has been badly hit by the rise of satellite TV, as offered by Rupert Murdoch's BSkyB - and its boldest attempt to challenge Mr Murdoch ended in disaster.

Granada and Carlton, the two companies that merged to create ITV plc, tried to provide a terrestrial multichannel alternative with their ITV Digital service.

But the pay-TV venture collapsed in 2002, paving the way for the more successful Freeview service jointly run by the BBC, BSkyB, National Grid Wireless, ITV and Channel 4.

Chris Tarrant, host of Who Wants To Be A Millionaire?
Who Wants To Be A Millionaire? is a top ITV show

Changing tack, ITV decided to bolster its audience share by adding new digital channels ITV2, ITV3 and ITV4 - although it pulled out of the 24-hour news market by axing its ITV News channel in December 2005.

But ITV's woes are not just a question of outlets and delivery mechanisms.

The quality of its programming has also been heavily criticised by media analysts, who accuse former ITV boss Charles Allen of seeking to fill airtime cheaply and neglecting genres that are more expensive to produce.

As a result, ITV's biggest new hits in recent years have been quiz show Who Wants To Be A Millionaire? and reality TV programmes such as I'm A Celebrity Get Me Out Of Here and The X-Factor.

Few new drama series have been launched, while those that remain in the schedules tend to appeal to an older audience, rather than the under-35 age group favoured by advertisers.

Gaining viewers

The structural problem of ITV's decline in a multichannel world may be too much even for Mr Grade to solve.

But he will clearly be hoping to repeat the success he achieved at Channel 4, where he was chief executive from 1988 to 1997.

During his time there - a period in which C4 became notorious for outrageous youth-oriented programmes such as The Word and Eurotrash - he pushed the channel's audience share up from 7% to 11%.

Analyst Alex DeGroote at Panmure Gordon stockbrokers said Mr Grade's strong broadcasting CV meant the appointment should be well-received by the market, given the "management vacuum" at ITV since Mr Allen left in August.

Michael Grade leaving the BBC buildings in White City
Michael Grade had been BBC chairman since 2004

"[Mr] Grade may well, in due course, sharpen up the ITV programming output, which may help audience share," Mr DeGroote said.

"He is also very au fait with the onerous regulatory constraints on ITV. All this is, of course, positive."

ITV's headhunting of Mr Grade is a response to, but also a symptom of, the highly aggressive business climate in British commercial television at the moment.

Some of the most determined media moguls on the UK scene have recently had ITV in their sights, including Sir Richard Branson, one of the players behind cable TV operator NTL's recent proposal to merge with ITV.

Sir Richard, whose Virgin group owns 10.5% of NTL, was furious when Mr Murdoch's BSkyB blocked the merger move by acquiring a 17.9% stake in ITV for 940m.

With these developments still fresh in the broadcasting industry's minds, Mr Grade will need to keep a firm hand on the tiller as he steers the ITV ship through what are likely to be increasingly choppy waters.




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