ITV report card: Making the Grade?
Share price, programming under scrutiny after one yearAll eyes will be on ITV executive chairman Michael Grade when the broadcaster unveils its full-year figures Wednesday.
The wily showman has bought himself some time with last week's surprise hiring of former BBC1 head Peter Fincham to head ITV's program strategy (HR 2/29). But with ITV shares at an all-time low, an ongoing gloomy advertising outlook and the broadcaster increasingly vulnerable to takeover, many in the investment community are asking just what Grade has achieved in his 14 months atop the broadcaster.
"Michael Grade has not cut back and is following a strategy that is purely emotional, not strategic," says seasoned commercial television executive Paul Robinson, a former Disney executive and now managing director of global entertainment venture KidsCo. "Michael is essentially pursuing the same strategy as (former chief executive) Charles Allen. There's nothing radical or new, and it's the strategy that got Charles Allen fired."
Indeed ITV's shares fell, rather than rose, following its much-vaunted strategic review to city analysts last summer, which left many scratching their heads as to how it differed from the old strategy.
Among Grade's few new initiatives was the surprise announcement that ITV Production — headed by Dawn Airey — would produce an unprecedented 70% of the network's output, a figure many believe is unrealistic.
"ITV is still being run in an old-fashioned, paternalistic way. It is still big, fat and bloated and obsessed with its own production division, which puts more pressure on the in-house team," Robinson said.
"Why on Earth would any producer take their best ideas to ITV when they are only focused on their own production business?" added one independent producer who asked not to be named.
The longer-term problem for Grade is that ITV's share price has fallen steadily through his tenure and is now at £0.62, more than 40% lower than when he took the helm in January 2007.
Grade's decision to fight BSkyB's position on the shareholder register also is likely to send shares falling further now that antitrust authorities have ordered Sky to trim its 17.9% stake to under 7.5%, according to analysts.
"That fact alone is probably preventing the stock price from reflecting any of the positive things that Grade might be doing," said Patrick Yau, media analyst at Ingenious Securities in London.
A report published Monday by UBS analyst Daniel Kerven predicts that online advertising, ad-skipping and continuing fragmentation will all put pressure on shares.
When Grade arrived last January, he told shareholders and analysts at his first results presentation that he wanted to put a focus on programming and that ITV's drama output would have to become more edgy, original and diverse.
Twelve months hence, the revamp of ITV's primetime schedule has been mixed. While such key 9 p.m. dramas as "Kingdom" and "Trial and Retribution" have proved successful, a recent wave of new launches including "Echo Beach/Moving Wallpaper," "Honest" and "The Palace" have fallen well below the kind of audiences that ITV needs.
Outgoing TV director Simon Shaps can point to a restructured schedule, commissioning structure, unprecedented BAFTA-winning success and a transformed editorial focus as his legacy, but insiders believe that, for the next stage, a more creatively focused head like Fincham is needed.
"In hindsight, it almost feels that Simon was a very good interim manager and he is handing over to someone very strong," one senior ITV director said. "Only Simon could have taken us to where we were ... but he has more of the range of CEO skills than you would find for a head of channels job," the director added.
Fincham's appointment is undoubtedly a coup for Grade, but whether the former BBC boss can deliver change on the scale that Grade needs remains an unanswered question.