Content King only if you own it
November 16, 2010
ITV’s revenues and profits are resurgent, proving again that it has the world’s simplest business model and that you are just unlucky if you end up running it (or any other FTA commercial channel) in an advertising down turn.
But the new management team says it doesn’t want to ride its luck and has set a five year target for ITV garnering half its revenue outside of its main channel’s advertising take. On that basis this set of results actually contained more bad news than good.
The only readily available means of income beyond advertising are to sell your programmes to the viewers (by subscription or VoD) and to sell them (or their formats) to other broadcasters. It doesn’t take a management guru to point out the starting point of both these cunning plans is to Make Good Programmes that people want to watch.
ITV’s in-pouring of advertising has leant heavily on the marquee programmes like X Factor and Britain’s Got Talent, neither of which it owns. And while Downton Abbey may mark a return to form for the drama department, ITV will be disappointed income from its studios actually went down last year.
Now that it has money, ITV must be sure to spend it wisely, and mainly, on product. No more drama tied to a ‘star’ system with scripts moulded (ruined) to show-off the limited talent of a limited pool of former sitcom, soap opera or pop ‘stars.’ No more taking on the BBC for the same sport events (see ITV’s sunk without trace World Cup coverage). No more (OK, less) Simon Cowell and even have a plan B for Ant and Dec.
No amount of technology tinkering and platform launches will get ITV anywhere near 50 per cent non-advertising revenue if it doesn’t have – and own – a lot more good product. And if owning it doesn’t seem important then just look at UKTV, a franchise that exists on a sea of recycled product much of it not very good. Virgin is going to end up taking much less than it thinks it deserves for its half of the JV not so much because the BBC owns the other half but because the BBC ultimately owns the vast bulk of the product that appears.