Posted by Nick Thomas on March 4, 2009
UK commercial broadcaster ITV’s announcement this
morning that it would be cutting 600 jobs, slashing programming budgets and selling
off a number of its assets, was hardly a surprise. Broadcasters internationally
will recognise the picture: the downturn in advertising revenues, to which ITV
is exposed more than any other
broadcaster, has been accelerated by the economic downturn. Current models are
not sustainable and hard decisions have to be made.
ITV is also struggling to adjust to
fundamental shifts in the way we consume media content. As viewers spend more
time online, TV’s dominance is under threat. Moreover, while viewers have
hundreds of channels to choose from, mainstream broadcasters like ITV are
struggling to deliver to advertisers the mass audiences their business was built
on. Long gone are the days in the UK when a top-rated TV show would attract 15
or even 20 million viewers – now even when ITV has a smash hit – a Dancing On
Ice or an X-Factor, 10 million is rarely achieved. The future may be in niches
but ITV’s strength has always been in delivering those big audiences.
Faced with such a market, ITV’s attempts to
manage its decline have been patchy. It has understood the value of delivering
strong niche audiences via digital channels such as younger-skewing ITV2 and
has seen audiences growing for its online catch up service at itv.com. But the
news today that it is to sell off Friends Reunited highlights an area where the
broadcaster has consistently failed to understand what its audiences are doing.
By acquiring one of the UK's
early breakout web successes, ITV made a nod to the future. But it bought too late, for too much money,
without a strong sense of how it could leverage Friends Reunited’s appeal to
the benefit of the ITV brand. Recent attempts to revive the site, though noble,
were doomed. We’re all on Facebook now.
There are smart people in ITV, though
whether they are the ones who will still have jobs remains to be seen. It has
some fantastic content brands: The X-Factor delivers 10m viewers and is a great
driver of traffic to itv.com, but those shows are very expensive and too rare.
Elsewhere, even the virtual ‘bankers’ of the schedule have gone the way of
real-life bankers, with shows such as Heartbeat and The Bill having been
cancelled or cut back, without yet a new generation of shows to take their
While he was Chairman of the BBC, the
current ITV Chairman Michael Grade once argued that success was all about good
programmes, to the horror of those at the BBC who were busy creating
world-class online content. Has Grade understood that the future is about
content brands, not programmes, and that ITV’s online offerings represent a
bridge to the future, complementing those strong content brands from its core
TV business? Has that bridge been destroyed in an attempt to recreate a leaner
version of a business model that worked in the past? Time will tell.