ITV has raised concerns with regulators about the stake that British Sky Broadcasting took in the television group late last year, increasing pressure on Rupert Murdoch’s satellite company a week after the government called for a review of the investment.
Michael Grade, ITV’s executive chairman, highlighted the risk that BSkyB could block any shareholder resolutions requiring 75 per cent support, given its 17.9 per cent stake and typical voting turnouts of below 65 per cent.
That “may not be in the interests of ITV’s shareholders as a whole,” Mr Grade said, adding that he and the board were “anxious to represent the views of all shareholders”.
Mr Grade’s unexpected intervention came as regulators at Ofcom and the Office of Fair Trading are reviewing whether BSkyB’s investment threatens competition, endangers ITV’s public service broadcasting obligations or raises public interest concerns because of Mr Murdoch’s other UK media assets.
The former BBC chairman said he had had “one brief conversation” with James Murdoch, “where we both agreed he’d made a good investment” but had seen no evidence of BSkyB interfering in ITV’s affairs so far.
Mr Grade used his first results presentation since joining ITV to identify his priorities for solving the business’s problems. Advertising revenue at ITV1, the group’s core channel, would fall another 4.5 per cent in the first quarter and group revenues would probably decline for the full year, he cautioned.
The company was “playing catch-up” in many areas such as its online offering; fear of failure had led to a lack of innovation in programming; and the company had “a tendency towards bureaucracy”, he said. ITV had to raise its creative ambitions in programming, taking more risks and commissioning longer running drama series and new entertainment formats, Mr Grade said, highlighting the need to regain its “pre-eminence” in drama.
He signalled a push to remove restrictions imposed by the Contract Right Renewal system. The system, which forces ITV1 to cut prices to advertisers when audiences fall, led to a 12 per cent fall in revenues last year.
Mr Grade defended ITV Play, its “participation TV” channel, which is involved in a controversy about shows that invite viewers to call in using premium rate phone-lines.
He admitted that “in the excitement of live [broadcasting]”, producers could sometimes forget their compliance responsibilities but insisted ITV Play was not damaging the ITV brand. “Is it Brideshead Revisited? No, it isn’t. Does it give lots of viewers lots of harmless fun and pleasure? Quite possibly.”
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