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Friday, 4 January, 2002, 16:32 GMT
ITV: Switching over
For the first time in nearly half a century, ITV has failed to attract more viewers over the year than the BBC. Bob Chaundy, of the BBC's News Profiles Unit, examines the current state of an organisation beset by economic problems.

When, in 2000, the BBC's new director general, Greg Dyke, told the Edinburgh Television Festival that within a decade, ITV might no longer "continue to play its part in funding and producing the full range of high quality television", the speech was largely dismissed as rival posturing.

After the year ITV has just had, the prediction looks somewhat less hollow.

On the surface, ITV's first defeat in the annual ratings contest against the non-commercial BBC, is down to its programming. Certain gambles did not pay off.

Des Lynam holding ball
Des Lynam was a catch but did ITV take its eye off the ball?
When Des Lynam moved over to ITV to present The Premiership, he had made it clear how disillusioned he had been by the BBC's decision to schedule its forerunner, Match of the Day, at 10.30pm.

With the season barely begun, the ratings flopped. This was a woman's time for watching: Cilla was brought back and the Premiership moved to, you've guessed it, 10.30pm.

Then there was the humiliating failure of Survivor, the kind of "reality TV" series that was supposed to be the big hit of the summer but was not. Even series such as Bob and Rose, popular with the critics, were not embraced by the viewers, and Richard and Judy's defection to Channel 4 meant farewell to daytime domination.

Partly to blame for all this, according to ITV's head, David Liddiment, is the BBC. He argues that, by becoming obsessed with audience figures, the BBC, under its most commercially minded director general ever, has all but abandoned its public service obligations.

David Liddiment
David Liddiment blames the BBC for many of ITV's problems
By adding a fourth EastEnders and moving the news bulletin to free up more time for popular fare such as Holby City and The Weakest Link, the corporation has not only put "the soul of British television in danger", but has made it more difficult for commercial broadcasters to take risks with their programming.

Needless to say, the BBC counters that it needs big audiences to justify the licence fee. This justification has become more important since both the BBC and ITV are not only losing part of their audience share to the increasing plethora of digital and cable channels, but people watch less television than they used to. And that, in turn, is not good for advertisers on whom ITV depends.

For the root of ITV's problem is that advertising revenue is in its worst slump since commercial television started.

With pay-TV now taking 14% of the total advertising market, and ITV having to slash its rates by up to 30%, there are fears within the organisation that when the warmer economic winds inevitably start blowing, advertisers may have acquired a taste for the cheaper rates.

Last June, in a leaked letter to the prime minister, Charles Allen, the chairman of Granada, complained about the parlous state of ITV's finances.

The island in which Survivor was based
Survivor failed to keep the audiences captive
He implied that if the government did not dispense with regulations preventing Granada's merger with ITV's other big cheese, Carlton, the latter might well end up being gobbled up by some Johnny Foreigner such as Silvio Berlusconi.

This resulted in a spat with Carlton's Gerry Murphy who accused Allen of "hysterical scaremongering". Merger restrictions have now been lifted.

The two companies, which have both suffered poor financial figures recently, have been working together a little less acrimoniously on ITV Digital, the terrestrial version of digital TV.

But this service's dismal performance resulted in humiliation when ITV had to make a deal with arch-rival BSkyB to put its channels on to the Sky Digital platform, having spent months resisting the idea.

Some observers feel that ITV Digital's protracted problems distracted much of the top brass from ITV1's performance, thereby aiding its current predicament.

Who Wants To Be A Millionaire logo
Even the banker, Who Wants To Be A Millionaire's popularity has waned
In the short-term, ITV has been addressing its ratings slide by clamping its favourite artists in golden handcuffs. Ross Kemp, John Thaw, Sarah Lancashire and Robson Green are among those benefiting from this arrangement.

Once the advertising slump ends, ITV's bosses are confident ITV1 can re-assert its popularity.

In the longer term, the economic climate is still uncertain and the future holds one threat highlighted in a recent Times editorial.

The next technological mass-market breakthrough, it remarked, could be the Personal Video Recorder that can store vast amounts of video material in an equivalent way to a PC hard disk. It will make it possible to skip the adverts.

For ITV, that is "a grim prospect."

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