ITV Degrades

Michael Hedges April 23, 2009

Before the end of this year Michael Grade will relinquish his role as ITV chief executive. He never meant to remain the day-to-day executive and the announcements timing set twits twittering and clocks ticking. The mark of a true showman is knowing when to leave the stage.

Grade will remain non-executive chairman and, thus, have a significant hand in selecting a successor. Names will be floated, dismissed, floated again until one arrives either with a large bag of money or a degree in accounting. The ITV statement said a more information on recruiting a new chief executive will be revealed at the company’s general meeting in May. Grade’s replacement, it said, would be named before the end of this year. ITV has considerable bench strength of the television variety but shareholders will make this decision, most likely to spruce up the balance sheet for sale.

Stock traders – the thoroughly discredited lot who brought on the financial mess in the UK, Europe, North America, Asia, desert islands and mountain villages – “welcomed” Grade’s decision to remove himself from day-to-day operations at ITV. They and their self-promoted “analysts” want nothing more than a deal for ITV to arrive – along with attendant fees. As chief executive, Michael Grade stands in their way.

Rumors of suitors flocking – arguably invented by the aforementioned betting parlor heros – is largely verbal effluence. RTL’s CEO Gerhard Zeilerhas made no secret of his interest in trading RTLs toe-hold, Channel 5, for a foot-hold. Mediaset, the media holding of Silvio Berlusconi, might see an attraction to ITV, particularly for merging ITV Productions into Endemol. Mediaset has its own problems with Spain’s Telecinco. Others – NBC Universal and CBS/Viacom – have demurred…long ago. Disney could set up a quite interesting proposition if UK regulators and politicians didn’t faint dead away. Big media houses with access to liquid cash will wait until seven seconds before the lights go out to get the lowest possible price.

Conspicuous has been the lack of interest from within the UK. With the exception of former BBC Director General Greg Dyke’s rumblings private equity is nowhere to be found. Mr. Dyke has taken to sniping at Mr. Grade in Murdoch-owned newspaper columns. Mr. Murdoch – The Elder – still owns a significant piece of ITV while appealing a Competition Authority decision that controlling newspapers and television channels is a bad idea. If finally forced to sell his ITV shares Mr. Murdoch would be out a small fortune. Fortunately for him, he has others.

All that has changed since Michael Grade entered ITV back in 2007 is the passage of time and an economic downturn to rival the Great Depression. His intention to emphasize content, however correct, was met by scorn from the financial geniuses, cost control being essential for bigger shareholder dividends. Grade kept saying content is king and he invested there, notably new shows and expensive football rights. The accountants said content is expensive and, as ad revenues plummeted, they drew a line…sometimes referred to as the bottom line.

Oh, wait; the entirety of UK media is also contending with the endless squabbles over regulation, much of it drawn up in the middle of the last century. ITV’s revenue is constrained by rules – the Contract Rights Renewal system – set up to protect the advertising industry. Grade wants to see through that negotiation. And then there are rules about ITVs public service content, from local news to children’s programming, which has become mired in the quest for a Grand Unifying Theory manifesting itself, at the moment, as the Digital Britain project. Meanwhile, time passes.