There can’t be that many broadcasters heading to MIPCOM with a £200 million ($440m) war chest for acquisitions – of production companies, not programming – a high profile new global content boss in place and plans to double revenues from production and distribution in the next five years.
Yet when ITV executive chairman Michael Grade recently outlined a five-year investment strategy that included all of the above, industry observers seemed surprisingly underwhelmed by his ambitious growth plans for the broadcaster.
Admittedly, the news of Dawn Airey’s appointment as ITV’s new director of global content, fresh from her brief stint as CEO of doomed start-up Iostar, was already several months old by the time Grade outlined his grand vision to investors last month, and reports of a pot of cash for acquiring other production companies had also been doing the rounds for several weeks.
But it was the question of where ITV’s extra £600 million in content revenue will come from that left some analysts scratching their heads.
In Grade’s “content-led” strategy, the aim is to double revenues from production and distribution to around £1.2 billion by 2012.
Part of this will come from increasing ITV Production’s output to flagship channel ITV1, from the current level of 54% to as close as possible to the 75% maximum permitted under ITV’s indie commissioning quota, a goal that hasn’t gone down too well with the independent production sector, unsurprisingly.
In addition, ITV will be pushing to win more commissions from other UK broadcasters, but perhaps the key area of growth will come from the international market, where it has lagged behind the BBC so far.
Of course, ITV already has a successful international distribution business, as well as a growing production business in the US. But it’s a far cry from BBC Worldwide, which generated turnover of £810.4 million from its various lines of business last year, and it’s clearly got some catching up to do with Endemol and Fremantle on the local production front – despite the recent success of Dancing on Ice and Hell’s Kitchen.
With the latter now generating £50 million internationally, ITV is setting its sites on creating more programming that can travel internationally, from big entertainment formats to long-running drama series, which according to COO John Creswell can become “mini-business in their own right.”
Delivering this strategy will be down to Dawn Airey, whose arrival at ITV brings together both the creation and the international exploitation of programming under one roof in the hope that this will speed up the roll-out of its programme brands around the world.
It would be naïve to think that ITV Productions can suddenly deliver all this growth on its own, though
Already ITV has begun to invest in other production businesses, stumping up £2.9 million for a 51% stake in a new joint-venture with US TV movie producer Jaffe Braunstein in May, followed by the acquisition of a 25% stake in new UK indie Mammoth Screen in July. And by selling off more non-core assets, such as the Men and Motors channel, and cutting back on regional news, Grade is keen to make further acquisitions in production businesses.
Whether this will deliver the £600 million in additional revenue Grade is looking for remains to be seen, and at the end of the day, the strategy still depends on ITV delivering some hit shows in the UK. But by producing more of its programmes in the US rather than licensing the rights to third parties, Granada America will certainly be better placed to reap the benefits of any future programming success.
As for the Mammoth deal, that will guarantee Granada International a regular supply of strong drama from a top name producer lead by executives with a proven track record, at a time when consolidation in the UK indie sector has taken many of the country’s leading producers out of the market.
Admittedly it might not be as radical a plan as some had hoped for, but nearly four years on from the Carlton and Granada merger, it’s encouraging to see ITV finally putting international growth at the heart of its strategy. Now it just has to come up with the programmes to match its ambition.