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Structure and Ownership of ITV

 

 

 

 

 

 

 

 

 

ITV is an integrated producer broadcaster which runs some of the largest commercial channels in the UK. As well as traditional broadcasting on their channels, they also deliver their content on demand through many platforms, both directly and via ITV Player which launched in December 2008 being one of the newest online demand sites. As channel 4’s 4OD was released 2006 and BBC’s iPlayer in 2007.  ITV is a private company which is funded by adverts but 60% of the company is owned by ITV PLC.

 

History

In 1954 the Television Act, a British law which granted the construction of the first commercial television company, made commercial television in the UK possible and by 1955 ITV began broadcasting on Channel 3 in London. In 1973 Channel 3 had 15 separate regional broadcasting licenses which were all run by separate companies. The Broadcasting Act, which allowed companies to own more than one licence, was brought into place in 1990 this meant that these separate companies creating Channel 3 could merge. So by 1994 the first merge had taken place, this was Granada buying LWT (London Weekend Television) and Granada PLC then owned six regional licences by 2000. Soon followed by Carlton Communications owning five, Scottish Media Group owning two and Ulster and Channel remaining independent. So this obviously meant that the two companies with the most regional licences, Granada PLC and Carlton, merged next and in February 2004 ITV PLC was created. Merger plans were approved and then improved due to the changes in legislation so finally ITV PLC owned eleven of the fifteen regional licences (About ITV - History, 2014). 

 

Since the merger ITV PLC has become a much broader by expanding the channels that the company has. Each channel has its own niche audience and shows programmes to target that audience. So by 1998 ITV2 was created and can be watched on Freeview, Sky and also online with the ITV player, this targets a younger audience (young adult) by showing programmes such as Celebrity Juice and Magaluf Weekender. Whereas ITV shows programmes such as Emmerdale and Downton Abbey which might not be such an interest to the younger audience so they created a channel that would be so in the long run would create more money for the industry. ITV3 was then created in 2004 known for being the contemporary and classic drama channel and was soon followed by ITV4 airing in 2005 also known for the classic dramas but also sport and cult films. These channels then expanded ITVs target audience even more by having channels that show programmes which an older male audience would watch. Also in 2006 CITV was launched which is programme for children so they had created channels to try and suit every age group. The most recent channel which ITV PLC has announced was ITVBe which launched on the 8th of October 2014 which is an entertainment, lifestyle and reality television channel showing programmes including The Only Way is Essex and also some US content. This increase in product diversity which ITV has undergone has created a wider audience for the company making it "the largest commercial channel in the country, and the UK’s leading portfolio of digital channels" (Commissioning, 2014). 

 

Present

ITV are always expanding their ideas and are always trying to take a lead in terms of digital innovation and creative solutions according to Group Commercial Director at ITV, Simon Daglish. He explains "We continually strive to match our customer needs with creative opportunities to engage with our audiences. We have focused on partnering with new technologies (such as Shazam) and developing our own solutions (such as Ad Explore and Ad Sync) that are cross platform, as we know many of our users like to watch, take part and go deeper" (Emerging Trends in the Advertising Industry, 2013). The company have merged with ASOS just to try this Ad Explore system at which allows the audience to explore the ASOS clothing ad by offering an expandable overlay with a menu of links to extra content. Simon Daglish explains "This enables you to delve deeper into the advertiser’s offering and immerse yourself in the brand" (Emerging Trends in the Advertising Industry, 2013).

 

ITV offer cross-media interactions with their online website called ITV Player where any shows that have been missed can be caught up on for a maximum of 30 days after they have been shown on the TV. This can be accessed from PC's, mobile phones, through game consoles and even Smart TVS. The ITV Player still has adverts during the programmes but last year brought out an ITV Player app for Apple devices that allows you to watch programmes without adverts after paying £3.99 a month.

 

ITV creates its content from its very own ITV studios and third party independent producers. "As an integrated producer broadcaster, we have a unique opportunity to deliver value from our investment in quality content. By creating and owning content we can grow new revenue streams by exploiting that content across multiple platforms, both free and pay. Investment in our creative pipeline and in selective acquisitions is building our international content business as we sell our programmes and formats internationally as the demand for proven content continues to grow" (Business Model, 2014). ITV is also a multinational company. ITV Studios America is the largest part of ITV's international business and produces up to 750 hours of content. Their international production businesses produce their own original content and versions of UK's content for local broadcasters.

 

This year ITV have produced their first pay only channel on Sky, this channel is called ITV Encore. This channel shows "the best of contemporary British drama series from ITV" (Commissioning, 2014).

 

Advertising 

Annually ITV invests around £1 billion in content for its broadcast channels and ITV.com (Commissioning, 2014). ITV PLC’s money is made due to advertising and sponsorship as companies buy into having their adverts shown between programs that ITV show. Adverts are often shown between programs at which the product which is trying to be sold relates to and also what audience watches that channel or program. For example if someone was watching ITV2 and Celebrity Juice an advert which might be shown is a CD from the guest appearing on the show or a advert advertising makeup, something of interest to a young adult audience. 

 

On advertising trends the bank said its latest survey of UK media buyers suggested ITV family third quarter growth could reach 5.8% compared to guidance of 4% to 5%. Advertising growth next year could reach 6.7%, it added (ITV shares rise on hopes for boost from retransmission fees, September 2014).

 

However ITV PLC has had some money troubles in the past in 2008/2009 when ITV’s advertising revenue fell due to audience switching to niche channels and the internet. As a result of this ITV sold social networking site Friends Reunited for £25 million which they brought for £120 million so received a massive loss. It was also thought that ITV would have to end contract deals with celebrities such as Ant and Dec and Simon Cowell. The company also resulted to job losses and cutting of some TV shows. This isn’t the only way ITV have lost money as also in 2008 they were fined £5.68m as it had been found that the phone-in competitions on Ant and Dec’s Saturday Night Takeaway had been rigged (ITV Battles Advertising Downturn, May 2008).

 

Shareholders

In 2006 BSkyB acquired a 17.9% stake in ITV for £940m, which made it the broadcaster's biggest shareholder (BSkyB buys ITV stake, 2006). However ITV shares soared after Virgin Media owner Liberty Global bought a 6.4 per cent stake for £481 million, in a move that increased speculation about a takeover bid. American media mogul John Malone, who controls Liberty, bought the ITV shares from BSkyB, whose top shareholder, Rupert Murdoch’s 21st Century Fox, is a long-standing rival.

 

Trends

A major trend that is apparent in the company is the relationship between the TV and social media. This cross-platform approach has allowed audiences to become more involved with the company in many different areas. One example of this was "Broadchurch, took advantage of a hashtag #closure in on air prompts for the final episode" (Simon Daglish, Emerging Trends in the Advertising Industry, 2013) allowing fans to become more involved with a favourite programme and keeping them interested. This is then appealing to more and more people and is spreading ITV's name over social media so much so that it is continuing to create a larger audience. This means that ITV are also now starting to rely more and more on involving social media and the capability it has share ITV and get people involved all around the world.

 

Another trend that is becoming bigger for ITV is multi-screening as they have created a mobile ad format which allows advertisers to provide a take-over advert which synchronises with the TV ad in a break of the show. An example "enables broadcast advertisers to take over The X Factor programme app at the same time their spot appears on TV. Ad Sync compliments the mass awareness of TV and means you can deliver tailored brand experiences through a very personal device. Ad Sync is a high engagement ad format enabling brands to bring to life extra content, gamification, or competitions. They can be bought to complement a TV spot or alternatively as a solus second screen takeover" (Two Screens Are Better than One, 2014).

 

Competitors 

ITV competes for viewers with the BBC and other commercial broadcasters, including the Channel 4, Channel 5 and Sky families of channels. ITV Family share of viewing in 2013 was 23.1%, second only to the BBC's family of channels at 32.2%. However it is always a very big competition between the BBC and ITV for views. For example programmes such as Strictly Come Dancing (BBC) airing at 7PM and the X Factor (ITV) which airs at 8PM clash as they are both over an hour long programme, so this is a constant battle for competing for views.

 

Board

ITV has a very big team that helps to keep the company in line. The board of directors at ITV are led by Archie Norman, the chairman who has taken part in the business turn around, consumer marketing, international business and corporate finance, and their job is to oversee the management team to make sure everything is being handled correctly. Before this former BBC Chairman Mr Grade took over as Chairman before ITV claimed that in 2008 they would not be receiving as much income from adverts due to the UK economy slowing down. However Mr Grade enforced a turnaround plan to get the company back on track and he stayed with the company a year longer than his expected contract date. The management team led by Adam Crozier (Chief Executive since 2010) work together and check the Transformation Plan (ITV PLC) is being fully conveyed across the company itself. The company is split into three different areas these include broadcasting, online and global content.

 

In 2013 ITV's sales team wear awarded 'Sales Team of the Year award' in the Media Week Awards.

 

Conclusion

ITV have always seemed to be a very strong company but has had their money troubles just like many other companies. ITV continue to make progress with their strategy of growing and rebalancing the business. External revenues were up 9% in 2013, with non-NAR revenues up £175 million (17%), and for the fourth year in a row they've delivered double digit profit growth. Their branch seems to always be increasing and more and more channels are being added to their network meaning this company is likely to be one of the most popular channels for years to come.

 

Reference 

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