ITV: decoding a week of business-changing news
How should we interpret the double whammy of high-profile departure announcements at the commercial broadcaster, asks Raymond Snoddy.
What on earth is going on at ITV? To lose director of television Peter Fincham is unfortunate – but to mislay a chairman at the same time is downright careless.
Naturally everyone will look for the most dramatic explanations. A coup. Interpersonal warfare. Blood everywhere on the South Bank.
After all there is no sign of a viable alternative for Downton Abbey and, as for the X Factor, if ever there was a case of diminishing returns on a wasting asset. Just buying The Voice may turn out to be good business but hardly the most creative option.
Nobody really knows the nuanced conversations in the boardroom or executive offices that determine, or at least influence, when top executives decide to go.
When does a soft nudge turn into gentle push without the need for a shove?
It looks as if the departure of Fincham back to the indy sector again, and the impending departure of ITV chairman Archie Norman are unrelated and more or less what they say they are.
The common factor, and the most plausible explanation is that they have been at their present posts, very successfully, for eight years or so, are both multi-millionaires and might conceivable want a new challenge, or in the case of Fincham a different lifestyle.
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In the cynical world of the media this may be one of those rare occasions when the obvious explanation might be the right one.
As City analysts have argued there may also be an element of quitting when you are ahead before the clouds on the horizon start to thicken.
But ahead they certainly are at the moment. Shares that sunk as low as 32p and were around 50p at the time the new regime took over, are now over 260p, debt has been paid down and pre-tax profits of around £800 million are expected this year.
ITV, which had a deep-seated phobia about going abroad, has expanded internationally through an interesting spate of acquisitions of independent production companies.
Perhaps the greatest achievement of the Norman-Crozier regime was the obvious mistake they managed to avoid.
At the time the siren voices were singing loudly that ITV should sell off its production capacity, avoiding internal conflicts of interest and reducing costs by simply being a broadcaster. The idea looks superficially attractive for a couple of minutes until you work out that such a move puts you in thrall to all the programme makers of the day and that owning as much intellectual property as you can is the way to greater freedom, flexibility and profit.
As if to underline the failures of the old regime, news of the impending departure of Norman and Fincham coincided with the closure of Friends Reunited – once bought by ITV for £175 million and later sold for £25 million on the way to oblivion at the hands of Facebook and more recent usurpers.
In one terribly ironic case of personal heartache a very senior ITV executive – now no longer with us – was one of the countless number who lost their wives to an old flame thanks to the power of Friends Reunited at the time.
If you want to be really picky you could say that ITV never really cracked social media – although with very good reason – and of course viewing figures will always be under sustained pressure as choice and competition intensify.
The case for continuity was strong and that is what has happened.
Head of ITV Studios Kevin Lygo steps up to the Fincham job while former head of ITV Studios in the UK, Julian Bellamy, moves into Lygo’s shoes.
It wouldn’t be entirely daft if the theme were to continue with Crozier moving into his friend Archie’s seat but that would probably seem a little bit too cosy for a FTSE 100 company worth around £10 billion and it would be strange to turn hands-on Crozier into a non-executive.
The big question hanging over ITV is the most obvious of all. Can it maintain independent life as the leading commercial broadcaster in the UK?
The most rational answer is that it can for the foreseeable future. There is no sign of a crisis and certainly no debt mountain of the sort that would trigger a predatory approach.
Somehow the time has never been right for a serious bid from the most obvious source – the US.
When the shares were low there was a reason. ITV appeared to be a basket case.
Following the hard Norman-Crozier work ITV once more looks like a tasty morsel but it would need a bid that headed towards 350p a share to land a knock-out blow.
The winds of financial fashion are quite irrationally blowing against traditional network broadcasters – or “proven” media groups as the latest euphemism has it.
There are however straws in the wind heading in the direction of consolidation.
The media, and television in particular, is increasingly becoming a global business and television has survived better than most predicted in the face of the online onslaught.
In a way the first symbolic line of defence has already been swept away with Viacom’s purchase of Channel 5 and Channel 4 could go the same way if the Government is foolish enough to privatise.
In turn the BBC may decide its best option is to sell its 50 per cent of UKTV to its current partner in the venture of Scripps of the US.
There is a fashion in these things and a herd instinct.
Against such a background it would not be a strange thing if ITV were to start attracting takeover attention and it would be an easy bite for a US major seeking expansion or an online business seeking the greater presence a television and production company would bring.
There’s probably nothing happening at the moment. Archie Norman would not be thinking about standing down if there were.
This could be the year that something finally stirs and that a serious contender emerges to buy ITV, which as a quoted company is owned by a wide range of institutions.
For them it will simply be a matter of whether the price is right – or not.
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See also:
Interview: Simon Daglish and Rupert Staines on ITV’s programmatic deal