This week, ITV bosses laid out their plans to cope with the shortfall in advertising income that they’re facing. But is their proposed solution really going to help — or plunge them into more trouble?
Simon Shaps, ITV’s director of television, laid out this week the cuts that the company hopes will contribute a £100m reduction in the company’s expenditure. It’s going to cut back significantly on the number of one-off and two-part dramas that it puts out, instead concentrating on longer-running series that can be made more cheaply.
But at the same time, Shaps wants to improve ITV1’s performance in the advertiser-friendly markets of young, upmarket viewers who are currently staying away from the channel in droves. And like it or not, that takes money.
Part of the company’s plans include an extra payout to its shareholders of £200 million — taking the total cash returned to shareholders to £500m in 2006. I’m not a broker or city analyst, so maybe that may make sense in the world of the stock markets — although analysts responded by downgrading their opinions of ITV’s stock to one level above ‘junk’. Surely, though, that money could be better spent on improving the quality of the broadcasters’ content? Just think what half a billion pounds could buy in terms of well-made, interesting programmes that make ITV’s portfolio of channels a genuine destination again. Cutting the amount of money instead makes me worry that ad revenues will continue to fall, as the viewers ITV already has defect to channels that believe in spending money on decent programming.
The pool of TV ad income is getting smaller, of that there’s no doubt. As multichannel television takes hold in the UK, there are also more channels fishing for the lucrative ad contracts than ever before. Right now, it feels as if ITV are responding by throwing away their well-made fishing gear, and replacing it with a piece of twine on a stick.
