‘If peo­ple want ac­cu­rate news, ITV needs promi­nence’

The boss of the me­dia com­pany says it is time to re­form pub­lic ser­vice broad­cast­ing, writes Christo­pher Wil­liams in Cannes

The Sunday Telegraph - Money & Business - - Front page - Carolyn Mccall Big Brother Mas­terchef,

For many peo­ple, Lon­don Lu­ton Air­port is to Lon­don as Piers Mor­gan is to good tele­vi­sion, which is to say not even close and best avoided en­tirely if at all pos­si­ble. Carolyn Mccall sees things dif­fer­ently. At the turn of the year she swapped easyjet for the top job at ITV, where Mor­gan re­mains gain­fully em­ployed. Mccall also still prefers to fly from the bud­get air­line’s Bed­ford­shire base to Cannes and the some­what more glam­orous set­ting of the Mip­com me­dia mar­ket. Here, broad­cast­ers and pro­duc­ers from all over the world gather to buy and sell pro­grammes and ideas, gos­sip and swill cham­pagne with the Côte d’azur as a back­drop.

“It’s like a party out there,” Mccall ob­serves in a side room at the ITV stand, a tow­er­ing as­sem­blage of adapted ship­ping con­tain­ers over­look­ing the har­bour.

These are boom times for this part of the tele­vi­sion in­dus­try. Net­flix and Ama­zon are pump­ing bil­lions into big-bud­get dra­mas, and tra­di­tional broad­cast­ers are re­spond­ing with higher am­bi­tion and in­vest­ment for their own pro­gram­ming. Ev­ery sur­face at Mip­com is adorned with pro­mo­tions for a dif­fer­ent show vy­ing to be­come the next binge­wor­thy box set.

On one hand this is good news for Mccall and ITV. Its pro­duc­tion busi­ness, ITV Stu­dios, which takes com­mis­sions from any­one, is here sell­ing in­ter­na­tional rights to an adap­ta­tion of War of the Worlds and World on Fire, an epic Sec­ond World War drama. Both will be shown by the BBC at home, but strong de­mand for Bri­tish pro­grammes over­seas means ITV should be able to cash in on a new scale.

Four fifths of ITV Stu­dios’ busi­ness is cur­rently in less en vogue un­scripted re­al­ity and en­ter­tain­ment pro­gram­ming, but Mccall is push­ing it to­wards more drama.

“We’re size­able in scripted but there’s room to grow,” she says. ITV re­cently de­clined to bid for the pro­duc­tion gi­ant En­de­mol Shine, partly be­cause its fi­nances rely too heav­ily on and two age­ing un­scripted for­mats. De­spite ITV Stu­dios’ progress, Mccall is wor­ried and the bub­bly at­mos­phere of Mip­com sig­nals the cause. She be­lieves ITV’S iden­tity as a pub­lic ser­vice broad­caster is un­der threat from the rise of stream­ing.

Those who con­trol the pre­sen­ta­tion of stream­ing apps on screen, in­clud­ing Sky, Vir­gin Me­dia, Ama­zon, Ap­ple and Google, are not obliged to give the BBC and ITV the top billing they are guar­an­teed on tra­di­tional chan­nel list­ings. In­stead apps are pre­sented ac­cord­ing to com­mer­cial in­ter­ests, which might mean pro­mot­ing their own pro­gram­ming or sell­ing the best slot to Net­flix.

“They just do what they want to do, which is all about mak­ing money,” says Mccall.

For ITV it is a vi­o­la­tion of the reg­u­la­tory pact on which its public­ser­vice li­cence is based. It spends £120m a year on news pro­gram­ming that is un­prof­itable be­cause it at­tracts rel­a­tively small au­di­ences. In the old world of chan­nel list­ings it gets guar­an­teed promi­nence in re­turn, which boosts au­di­ences and ad­ver­tis­ing in­come from less wor­thy parts of the sched­ule such as I’m a Celebrity … Get Me Out of Here!

The deal is be­ing un­der­mined, says Mccall.

“If peo­ple in Bri­tain want news that is ac­cu­rate and de­liv­ered im­par­tially so peo­ple can make their own judg­ments about what’s go­ing on in Syria, what’s go­ing on in Amer­ica, what’s go­ing on in Saudi Ara­bia to­day, etc, if that is what you want then we need promi­nence,” she warns.

“Clearly, with­out promi­nence, we have to re­ally think hard about what we do.”

Mccall’s warn­ing is aimed at the Gov­ern­ment. Ofcom, the me­dia reg­u­la­tor, is re­view­ing promi­nence rules and is due to make rec­om­men­da­tions to min­is­ters scep­ti­cal that they should in­ter­vene against the force of change.

“This is not about stop­ping tech­nol­ogy, this is not about not hav­ing all of these tech gi­ants im­prov­ing lots of peo­ple’s lives,” Mccall protests. “It’s about say­ing fine, but if that is the way that tech­nol­ogy is go­ing, then you have to re­form pub­lic ser­vice broad­cast­ing from how it was orig­i­nally set up 40 years ago.”

There is an ur­gency. Ap­ple is due to be­gin a big push into tele­vi­sion next year and is in talks with BT to get its own set-top box into more homes. Ama­zon is pre­par­ing to launch its own ul­tra-high-def­i­ni­tion tele­vi­sion sets to crack more homes.

“This is about pace and speed,” says Mccall. “I think the great con­cern is peo­ple move very slowly, and it’s only much later they look back and go, ‘My god, if only we’d done that’.”

Mccall knows from ex­pe­ri­ence that me­dia shifts can hap­pen quicker than you ex­pect. Prior to easyjet she ran the pub­lisher of The Guardian and in 2005 in­vested £80m in new print­works. This year they were writ­ten off and scrapped as the ac­cel­er­at­ing de­cline of print meant the op­er­at­ing costs were un­sus­tain­able.

She does not deal in men­aces, but the im­plicit threat from ITV is that with­out new guar­an­tees of promi­nence, it re­ally could hand back its pub­lic ser­vice li­cence when it is next due for re­newal in the early part of the next decade. It might lose the third slot on tra­di­tional chan­nel list­ings, but what will that be worth by 2024 when most view­ing will be via stream­ing? Per­haps not £120m.

“I haven’t gone down that route yet, but I think what we would have to say is, ev­ery­where you look, the promi­nence is be­ing di­luted and it’s not just us,” says Mccall. “It’s the BBC as well, and I think that’s very dan­ger­ous for Bri­tish so­ci­ety.”

Pre­vi­ous ITV regimes have threat­ened to ditch its pub­lic ser­vice li­cence, but mostly as part of cam­paign­ing to keep the BBC in check. This time ITV and the BBC are united in their con­cern, al­though Mccall has to think about the bot­tom line as well as the im­pact on pol­i­tics and the pub­lic in­ter­est.

“I think we are in a dif­fer­ent po­si­tion to a state-funded broad­caster, which starts the year with a lot of money in the bank,” she says. “We have share­hold­ers and so we have to make the re­turn on what we do.”

Mccall has al­ready cut their re­turns. For five years un­der her pre­de­ces­sor, Adam Crozier, in­vestors en­joyed an­nual “spe­cial” div­i­dends worth hun­dreds of mil­lions.

The pol­icy was ditched as soon as Mccall ar­rived, send­ing a clear sig­nal that ITV would need to spend more to re-en­gi­neer its busi­ness for the stream­ing world.

Crozier and chair­man Archie Nor­man re­paired the bal­ance sheet af­ter the re­ces­sion that fol­lowed the fi­nan­cial cri­sis and built up ITV Stu­dios to re­duce the com­pany’s re­liance on the volatile ad­ver­tis­ing mar­ket. Mccall now faces an ac­cel­er­at­ing shift in view­ing habits and be­lieves that se­cur­ing a fu­ture for ITV de­mands in­vest­ment.

The catch-up and live-stream­ing ser­vice ITV Hub is get­ting a £40m over­haul to make it feel more like a stream­ing ser­vice from one of the tech gi­ants and al­low ad­ver­tis­ers to tar­get view­ers based on their con­sumer pro­file.

Mccall’s big­ger bet is an as-yetun­named sub­scrip­tion stream­ing ser­vice due for launch next year. She has held months of talks with the BBC in hope of com­bin­ing its pro­gram­ming

li­brary with ITV’S to cre­ate a more com­pelling of­fer to view­ers. How­ever, Mccall is now clear she will not wait for the BBC to get be­hind the project.

“I would say we’ve made it re­ally clear that we would want to col­lab­o­rate and have other part­ners who could ob­vi­ously aug­ment what we do,” she says.

“But it was also fairly im­por­tant to just take the lead on it, and say there is a win­dow other­wise we’re not go­ing to be in it. I think for a com­mer­cial pub­lic ser­vice broad­caster, it would be very odd not to be in sub­scrip­tion video on de­mand.”

Tra­di­tional US broad­cast­ers have been suc­cess­ful with some­thing sim­i­lar called Hulu. As well as act­ing as a li­brary of broad­cast pro­grammes it com­mis­sions ex­clu­sive new ma­te­rial such as The Hand­maid’s Tale to en­tice subscribers. Mccall says her ser­vice will also need ex­clu­sive new pro­gram­ming that has not been seen on ITV “but it won’t be in year one”. With 40,000 hours of pro­gram­ming al­ready at her dis­posal, com­pared to Net­flix’s 25,000, Mccall be­lieves there is plenty to start with.

“As long as you of­fer good value, you will get the sub­scrip­tion,” she says.

New tech­nol­ogy, ex­clu­sive pro­gram­ming and ex­per­tise in sub­scrip­tion busi­nesses will be costly, and the scale of the in­vest­ment is yet to be dis­closed. ITV will at least ben­e­fit from free ad­ver­tis­ing via its own chan­nels, how­ever. Mccall is in the mar­ket for a new chief fi­nan­cial of­fi­cer to help set the bal­ance be­tween spend­ing and sav­ing for the in­evitable ad­ver­tis­ing down­turn. An an­nounce­ment is due soon.

“That’s a fine bal­ance, be­cause that’s the cal­cu­lated risk when you know there are go­ing to be eco­nomic head­winds,” she says. “We’re still very sen­si­tive to the econ­omy.”

Many in the tele­vi­sion in­dus­try be­lieve that the uncer­tain­ties faced by ITV over its pub­lic ser­vice broad­caster sta­tus and the ad­ver­tis­ing mar­ket, which still ac­counts for 60pc of profit, mean per­sis­tent City spec­u­la­tion that it will be­come a takeover tar­get is mis­placed, even as Com­cast pays £30bn for Sky.

“Com­cast bought Sky for a com­pletely dif­fer­ent rea­son,” of­fers Mccall. “Who knows? I don’t know. All I know is we have shed­loads to do.”

‘The great con­cern is peo­ple move very slowly, and it’s only much later they look back and go, “My god, if only we’d done that”’

Carolyn Mccall, the chief ex­ec­u­tive of ITV, is over­haul­ing the broad­caster’s live-stream­ing ser­vice ITV Hub

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