Is there a future for free-to-air commercial TV?


In recent months, several household names have seen their share prices plunge to hitherto unseen levels. They include British Telecom, British Airways and ITV. Following the market rally, their shares have recovered somewhat but all three companies face massive challenges – from their competitors. Furthermore, all are running heavy pension fund deficits.

In ITV’s case, many developments within media-land have conspired to operate against its interests. Following its formation from Granada and Carlton in 2003, the new company was obliged to sign up to the highly complex Contract Rights Renewal (CRR) agreement, under which advertisers were given substantial financial protection to offset ITV’s market dominance. Following persistent pressure from ITV, the Competition Commission has - at long last - accepted the case to reform the CRR.

In its recent half-year results, ITV confirmed that its UK TV advertising revenues fell by a shocking 15%: many commentators wonder whether ITV’s advertising income will ever recover. After all, with the advent of digital broadcasting, there are now many more advertising outlets. For years, commercial television prospered on the back of legendary programmes such as Coronation Street, watched by massive audiences. Whilst recently ITV has sought to improve its content with such programmes as Britain’s Got Talent, this is not obviously reflected in its dire figures.

Net debt has now reached £730 million and a major rights issue is expected once the new Chief Executive - expected to be Tony Ball - has settled in. Ball would also have to consider whether ITV’s free-to-air commercial model is viable, especially since his former employer, BSkyB, is prospering on the back of its Pay-TV model - and its diet of sport and film.

Is Scottish TV’s Roy Thompson, who famously said that commercial television was ‘a licence to print money’, now turning in his grave?