On Wednesday December 3rd 2003, Mick Desmond, Chief Executive, ITV Broadcast, gave our annual Keynote Lecture at the North of England Mining Institute in Newcastle.
What is the future for the ITV Regions? Will there still be Tyne Tees TV studios in City Road in the next 5 years? Will our freelance producers and directors have to travel to Leeds, Manchester or London to find work?
This is a transcript of his presentation.
Introduction from Tony Edwards
Good evening and welcome — I am the Secretary of the North East and The Border Centre and it is our intention with these keynote events to bring key players in our industry to address us on current issues, and our speaker on this occasion more than fulfils that aim.
Mick Desmond is the new Chief Executive of ITV Broadcasting, which means he's directly responsible for network commissioning, sales and (of course) the regional broadcast licences such as those held by Tyne Tees Television and Border Television. He has a degree in communication, arts and media, and joined HTV in 1981. He rapidly rose through the ranks and in 1988 joined Granada as Sales Controller. Mick was promoted to Executive Sales and Marketing Director in October 1992.
Well, progress followed and in September 2001 Mick was promoted to the newly-created position of Managing Director of Granada Broadcasting and Enterprises, a division of Granada PLC, responsible for Granada's broadcasting interests.
Mick was appointed Joint Managing Director of ITV in May 2002 and continued in his role as Managing Director at Granada Broadcasting and Enterprises. In October this year he was appointed Chief Executive of ITV Broadcast, one of the two divisions that will make up the new ITV.
When he's not worrying about television (do you worry about television?) ["Not much!"] his interests include his wife and children at home in Wimbledon; he's a keen golfer, and he enjoys watching sport (particularly rugby), so welcome on that account to this region at this point in time. ["But I am Welsh!"] [Laughter] — there is a down side to everything.
On a more serious note perhaps, Mick's appointment comes at a time when Britain's television industry is in a tumultuous state. The BBC are getting ready for charter renewal; Rupert Murdoch's Sky Network is completely dominating the fast-expanding multi-channel sector; there's a new broom at Channel 4; a new head of Channel 5 and (after years of being in competition with each other) Carlton and Granada are finally joining forces to create a single ITV.
So what sort-of ITV can we expect and will it (as its critics predict) be a blander, more down market channel, and how will it compete with a better-funded, more aggressively commercial BBC? More importantly perhaps in this part of the world, where many independent production companies as well as more than 350 staff at Tyne Tees Television and Border Television rely on ITV for their livelihoods, what are the prospects for production in this and our other English regions? Hopefully our guest speaker will give us some answers to these searching questions.
Ladies and Gentlemen, please welcome to our own media scrum our guest for the fifth annual keynote presentation — Mick Desmond.
Thank you for the introduction. Good evening, ladies and gentlemen. It's a special pleasure to be back in Newcastle so soon after Jonny Wilkinson's stunning World Cup achievement. As you're probably well aware, this was seen exclusively on ITV with 92% of the available male audience watching. It makes you wonder what happened to the other 8%! And, of course, Tyne Tees made the first class peaktime documentary on Wilkinson that we showed last Friday, and I saw Jonathan Edwards also featured in that documentary. He may come from Farnham (Wilkinson that is), but I'm sure you think of him as your very own, and you should. His time with the Falcons has served his natural talent, and his team has had great skill. You're lucky to have him and he's lucky to have Newcastle.
[Editor's Note: England had just won the Rugby World Cup in Australia, with Jonny Wilkinson scoring the wining drop-goal in the final seconds. Champion triple-jump athlete Jonathan Edwards was in the audience.]
Thank you to the North East RTS for inviting me to deliver this annual keynote lecture. With immaculate timing, you've got me here at a very key moment in ITV's development and a critical one for ITV's involvement with the regions. I'm well aware that three years ago, David Puttnam stood here and gave some very pessimistic predictions about the future of ITV regional programmes.
More about that later.
On the network, the Rugby World Cup has capped an excellent autumn for ITV so far, where Pop Idol, Holiday Showdown, a raft of quality dramas like Prime Suspect and Foyle's War have done very well for us. But we're only as good as yesterday's overnights and ITV has to be strong enough to survive long into the digital future. That's why we are now putting all our energies into making the new merged company the coherent, integrated broadcaster ITV has never been able to be in the past.
If I was a clairvoyant, I could probably divine the three main questions you want to answer from me this evening: -
Firstly, was David Puttnam right three years ago when he predicted the end of regionalism of ITV?
What will the merger mean for Tyne Tees in Newcastle/Gateshead?
And Can Bobby, Alan and the team at St. James's Park keep up their winning form to win a Champions League place for next year?
I'm sure the answer to the last question is obviously "Yes", but the others are a little bit more complicated.
So I'd like to do you the courtesy of first explaining what the new company will look like. Then I'll say something about our overall strategy to keep ITV fighting above its weight in what is now a rather crowded and bloody arena. And then draw out from these what I think the implications for regionalism and regional programmes might be, and how throughout this sensitive process in the years ahead, our aim must be to balance commercial with creative imperatives. Because, in the words of the song, you can't have one without the other.
First of all, for new readers, what is ITV plc? It is the combined production, broadcasting and sales divisions of Granada and Carlton, who will be operating as a single company from February next year, when the legal and regulatory hoops have been gone through. This will constitute about 92% of the totality of ITV, with Scottish, Grampian, Ulster and Channel Television outside the fold, remaining independent companies. As shareholders in ITV, they continue to have the voice in the management and development of ITV1 through ITV's governing body, ITV Council.
The new company has three main operating divisions, in addition to the 11 regional licences:
Broadcasting (of which I am Chief Executive), which will include airtime sales, marketing and the programme commissioning function under Nigel Pickard as Programme Director, who will be answerable to ITV Council for his programme policy.
The ITV News Group, with Clive Jones as Chief Executive will oversee ITV's national, international and regional news services and those of the ITV News Channel
Granada Productions, under Simon Shaps, is the new company's production house, incorporating existing Granada and Carlton production resources, with three separate departments for Factual Entertainment, Daytime and Lifestyle, Drama, Children and Arts.
Finance and Commercial operations look after the money and central services respectively. Charles Allen, ITV plc's Chief Executive, will chair the Broadcasting News and Production divisions. All the senior-level appointments are now in place; and the second level divisional appointments are now being made and we aim to have the full team in place by early next year.
What does all this mean?
The most important immediate effect is that old, dysfunctional ITV is dead. Carlton and Granada can now stop competing with each other for market share, for talent and programme ideas, and start working together with a new focus on ITV. It may seem a long way from us here, but let me tell you, the running sore known as The London Split has made all our lives a misery for nearly five decades. Now it will disappear. The ITV schedule will no longer be made up of two franchised halves — the weekdays and weekend — and can now be planned by Nigel Pickard and David Bergg as a coherent 7-day whole.
It means that our production arm — with a turnover of nearly £670million — will be bigger than either Endemol Europe or FremantleMedia, with the potential to take over the Number One spot currently occupied by RTL. It will have many of ITV's banker shows and these — and the talent it is able to attract — are the key to ITV1's future stability and success.
The creation of a new integrated News Group for the first time brings together ITV's national, international and regional news services under one common leadership. For regional news, this will mean common new technology and common branding but not a common editorial line. I want to come back to this later.
And all this means two important things for ITV1.
The first is that the commissioning will remain completely independent of the production function and will continue to be based entirely on merit. We do have schedule and viewers at a disservice if we start carving up commissions to suit our production business. It simply does not make good commercial sense to make the broadcaster the servant of the producer. Yes, of course we want lots of ITV1 commissions; but we'll get them through the quality of our ideas, not by muscle-power. It is vital that independent producers and the 'non-aligned' ITV companies have full access to network commissions, because the future depends on ITV1 getting the best ideas.
The second is that (and I'll explain in a minute) investment in the ITV1 schedule is absolutely critical to the channel's future success and therefore there is no question of squeezing money from programmes. They will have to be made efficiently and be competitively priced, but we want the best schedule we can get and we know that costs. The 2004 network budget has already been set with an inflation-busting 7% increase and we know we have to keep pumping money into programmes to get the best commercial return.
This handful of key implications form the basis of our strategy.
In 2005 ITV celebrates 50 years of commercial public service broadcasting.
It's had its ups and downs during that time, but no one disputes that ITV kick-started competition with the BBC for talent, ideas and quality that has resulted in some superb television over the years. And the creative competition is still very much in evidence. We vie for the service of Andrew Davies for our classical adaptations and we vie for mass audiences for exceptional quality peaktime drama like Dr. Zhivago, The Forsyte Saga, Sons and Lovers and Henry VIII. This year, 9 out of the top 10 new drama titles were shown on ITV1. And our under-rated regional services don't get nearly enough credit for the highly committed work they do on- and off-screen.
We've always been the brash kid on the block, but no-one can deny that ITV has made its own distinctive and effective contribution to the public service broadcasting landscape, and that contribution — whatever form it may well take — will be needed more than ever in a future of 'a hundred channels and nothing on'. To be able to make that contribution, we have to get ITV in the right shape.
There are a number of changes we must make if ITV is to survive and thrive in future decades. So our strategy is based on making those changes and being quite brutal.
For the first time, we had the opportunity to act like a market leader in a sector of broadcasting — which is free-to-air and advertiser-funded — and to focus outwards on the competition and on our customers — the viewers, the advertisers, and (to a certain extent) regulators and policy-makers — rather than on internal squabbles and rivalries.
We know the people who are really engaged with a TV programme also pay more attention to the ad breaks in and around it. Attentive viewers are what we want and what advertisers want. We only get them with the best 'talked about' television. This means concentrating on delivering popular programmes and convincing advertisers that we are the best deal in town. One of the remedies accepted by the Competition Commission means that we must keep our share of commercial impacts — in other words the number of people watching a 30 second ad — or we effectively forfeit money to advertisers. This is the best incentive in the world for investing in programme schedule to ensure that we have attentive viewers who watch both the programmes and the ads.
We live in an increasingly competitive multi-channel world. ITV2 is doing very well with a 1.6% share of viewing and increasing all the time, and ITV News has really come of age since the Iraq war. ITV has the biggest programming investment in Europe of any commercial broadcaster and we plan to use it to extend the ITV family with new free-to-air channels. The first will be ITV3, a joint venture channel for children, and other channels which are in the pipeline. We've always had the best programmes and the best brands — our problem has been finding outlets for them. We, too, need the value and talent growth benefits that other broadcasters get from operating across a variety of channels. Instead of looking in, we're determined to grow beyond ITV1.
Another major change we want to achieve is to place news at the centre of our public service offer to viewers. We know that news is at the very top of the politician's and policy-maker's agenda. But it's also something that we have traditionally done superbly well, both at national and regional levels, so we want to build on that.
News has traditionally been a scattered activity in ITV, with the ITN service at the centre and the patchwork of regional newsrooms doing their very own thing around the country. This was absolutely right for the early and middle years of ITV's development, but it no longer makes sense. We need a unified news strategy and more efficient use of regional resource, with the latest technology and more front-line journalists to deliver high quality regional and sub-regional news. We want to revitalise regional newsrooms and get them making a wider range of programmes that will be rooted in local communities.
A unified news strategy will benchmark newsgathering, production and presentation standards but we're clear that what it shouldn't do is impose a common editorial line or central agenda. It must retain for the nations and regions to be completely free to set their own.
In the production business, our aim is simple: to become the Number One commercial broadcaster in Europe. The merged company is already Number Two, but there's a stiff margin to close to topple European production giant RTL with its annual turnover of £866million. It is entirely possible to achieve if we focus investment and energy on building bankers, must-see events and the entertainment formats of the future. That will sell around the world.
This is not just a venture; it's a creative adventure. Unless we are prepared to take some big risks, invest in talented people on and off-screen, and give free rein to those who can realise the creative potential of people and ideas, then we might as well be in the widget business. Our raw material is creative capital; our production plant is people. We're in a creative business and our job is to make and show great programmes.
But none of this can happen properly in a poorly-run, inefficient, or failing company. That's why our top priority must be to maximise the benefits of integration to create a stable, profitable base for creative people to do their best work.
You'll have heard a lot about cost cutting (if you work in the industry) or cost-saving (if you work in the City). But this is not about penny-pinching for its own sake. The aim is to ensure that as much of ITV's advertising income as possible is reinvested on-screen where it matters for viewers and advertisers. Money tied up in duplicated resources, in outdated working practices, in bricks and mortar no longer fit for the purpose of broadcasting in the 21st century — this is all money that could and should be invested in regional and network programmes.
This does mean there will be changes for those of you who work in the regions — as there have been at network level and across every single part of the business.
Because of the way ITV was originally designed in 1954, we are now responsible for a great many outdated buildings around the UK, and with them enormous real estate costs. Granada's expenditure on its many sites now exceeds its programme development budget, and nearly half its 4,400 staff work in studio maintenance and resources rather than in developing and making programmes.
Perhaps here I could quote another of your distinguished recent speakers:
"The status quo is not an option... [We need] a sensible flexibility of resources in response to technological and market change. It doesn't make sense to spend money on bricks and mortar when it should be focused on programmes."
Now those words could have come from Charles Allen's lips, or indeed my own. But they weren't, they were delivered by the ITC's Chief Executive, Patricia Hodgson two years ago. It was true then — and it's even truer now. The status quo is not an option. As painful as it is (and it sometimes is very painful), change is inevitable and desirable. We have to shift the focus from bricks and mortar to talent and technology.
People do grow attached to buildings but we must face the fact that many of our premises are no longer fit for the purpose. Programme-making methods and commissioning patterns are very different now than even 15 years ago. Few productions need huge studios any more; and ITV no longer needs a region-by-region infrastructure of studios and resources to service network commissions which come and go.
And remember that well over 25% of ITV commissions have already gone, as far as in-house producers are concerned. The independents have already taken over a big chunk of the commissions that used to go in-house to producers like Tyne Tees. It is a frustration to us that regional centres like Tyne Tees are prevented from competing on a level playing field for non-ITV commissions because they are not classed as independent — especially when we know that 90% of independent network production, as currently defined, happens in London. We think the losers from this bizarre definition are all the regional producers, including the regional independents seeking to build their businesses, often working closely with regional in-house producers like Tyne Tees.
The upshot is — as again the ITC recognised in an important report two years ago — we have too many regional production centres competing against each other to be sustainable. The result of this 'divide and rule' approach has been further gains for London, as regional centres have not achieved the critical mass to pose a sustainable threat to the capital's dominance.
This is one of the reasons why we've bitten the bullet and are moving Meridian out of its 30 year-old studio complex to a new site. Southampton has never really punched its weight in terms of network production. Less than 1% of UK viewer homes are accounted for by production in that region.
But in regional terms, Meridian is a national leader, with three of the most watched news programmes on the network and some of our best non-news regional programmes.
We're investing in this success, with £6 million going to the state of the art new digital news centre and new facilities across the region. The new site will replace an outdated studio complex at Northam where network studios largely lie idle and some staff work in leaky Portacabins. Regional journalists will trade tapes for server-based production and get out of the studios and closer to their regions with more satellite trucks. The result will be an even stronger regional service.
Like Meridian, Tyne Tees is one of the strongest performers in the ITV regional map. We want this ITV region to tap a similar multi-million pound investment in state-of-the-art regional facilities and technology. But we'll only get that if we can make sure the funds are not tied up in property and resources which have no impact on-screen. This will inevitably mean changes.
Talk of change is bound to be unsettling for everyone involved in programme making in the region. But this is about progress — taking ITV's regional services in the 21st century, not reducing our regional commitments. We will be investing in new regional centres; they'll be different, slimmer, state-of-the-art, and more concentrated on the news and regional production than before. This is an advance, not a retreat.
We are acutely conscious that we're under a big Ofcom microscope when it comes to our regional and public service responsibilities. The merger, site changes in the regions, Ofcom's first 'drains-up' review of the public service landscape — these have all come together at once and they are all forcing us to think very seriously about how we deliver the best regional services in the future.
There is already a pattern emerging that I think is consistent with how the market is going, with what the viewers want and with what the regulator will support.
It is a service based around the highest quality regional and sub-regional news — where Tyne Tees already scores over BBC North East — with on-the-ground journalists also feeding into current affairs and other programmes for and from the region.
So David Puttnam was wrong in his analysis three years ago that regional ITV would just wither on the vine from the lack of TLC, because it's a central part of our strategy and a defining point of difference between us and the other channels. People want to know what is happening on their doorstep and that's why regional news services are so important. But, beyond regional news, there are legitimate questions to be asked — and the regulator is posing them as we speak.
A cost/benefit analysis of public service broadcasting being done by the ITC at the moment shows that non-news regional programmes cost more in real and opportunity-cost terms, but at least are valued by viewers, whereas news and current affairs programmes are highly valued and relatively cost-effective.
I hope this kind of vital information will help shape regulatory policy so that we really can put finite resources into public services that the public wants to use. Where there is strong evidence of demand — and I know that some peaktime regional shows like The Dales Diary are very popular — there will be a strong incentive from us to invest in that proposition.
Tyne Tees has a proud programme-making record, and since Granada took over in 1997, production has been rebuilt with a talented factual entertainment team making the Top 100 shows for Channel 4 and the very successful After They Were Famous strand for ITV. And we were delighted with Jonny Wilkinson — He's Done It! — a project turned round in double quick time and a credit to the 'home team' here in the North East. There are other kinds of talents here too — Sign Post, based at Tyne Tees, is the national centre of excellence for signing programmes for the deaf and hard of hearing. And there's a strong network independent working in the region — Coastal's second series of Wire in the Blood will air on ITV1 early next year. Other ITV network commissions are coming through for the region in 2004. One of these (a major Granada drama series with the potential to become an ITV1 'banker') will be shot entirely on Teesside. But commissions don't last forever (well, perhaps in the case of Coronation Street they do...), and very few of them require the scale and studios and resource like those at City Road.
Whatever the trends in commissioning and production, there is of course now statutory protection in the Communications Act for network production outside the M25. Together with other broadcasters, we are still struggling with Ofcom at the moment on the criteria these productions will have to meet to count for the new quota. It is already clear that this could involve broadcasters — and programme suppliers — in many metres of red tape.
What isn't clear yet is whether this will work to support real creative hubs in the regions, or just more jobs for regulators. No quota can conjure up sustainable programme-making jobs without a reliable commissioning stream and a critical mass of talent. We left behind the old system of ITV production guarantees when we moved to commissioning meritocracy. There's no turning back. Production quotas attached to regions are not the answer, though I think the idea of basing a BBC channel or two outside London might work wonders in achieving that critical talent mass from which everything else flows.
So, whilst I think David Puttnam was far too pessimistic in his analysis of the future for regionalism, there are changes ahead. Life can't continue as it did 20, 10 or even 5 years ago. I see this as a challenging positive. We have to meet the needs of a very competitive market and a very discriminating viewer base if ITV is to reinvent itself for the digital future.
Finally, there is an important change at Tyne Tees I must acknowledge.
Margaret Fay (who is sitting here tonight) has been an essential part of the company for more than 22 years, and since 1997 she has been the public face of ITV in the North East as Tyne Tees Managing Director. She must thrive on takeovers because she has survived two in her time, and she has won hearts and minds with her open and direct style. Her contribution to Tyne Tees and the North East has been exceptional and we'll miss her in the company very much. But the solid working relationship she forged with the local business community whilst she was here prepare her admirably for her new role as Chair of One NorthEast, and I'm sure we'll keep strong and mutually supportive links with her there. Thank you Margaret for your distinguished work for the company and for the region, and we look forward to working with you at One NorthEast.
As you are probably well aware, Graeme Thompson will succeed Margaret in the New Year and will, I know, bring a breadth of experience of television and the region, I think Graeme will be a fantastic individual to take over the new company.
More importantly, thank you for inviting me here tonight. I look forward to seeing the scenes of mass rejoicing in due course when Mr Wilkinson (like Mr Edwards) gets his Freedom of the City. I'm sure that's going to come soon.
Thank you for your time this evening.
Questions and Answers
[Tony Edwards] Well, I think it was at least provocative and contentious, and Mick has kindly agreed to answer and respond to any questions relevant to the issues. Are there any questions from the floor please?
[?] Does ITV's commitment to the region extent to maintaining the respected and trusted brand of Tyne Tees or will that brand be further swallowed up by the more corporate ITV1, ITV2 etc?
I think it's like two heads of the coin really, or two sides of the coin. I think what we've seen (and we did a lot of research over the last two or three years) is that certainly viewers under 35 look at programmes, less so the channels. I think the struggle at the moment whether you're the BBC, ITV or Channel 4 is trying to get channel loyalty. We have (as you're well aware on screen) gone through a complete rebranding exercise on screen where all our national propositions now have a real sort-of sense of family. You know we're using our stars with idents to try and get a flavour of what ITV is — we have a depth of talent, but it's also still critical that in the region certainly when we come to regional programming you know that they are tagged with the Tyne Tees brand and I think we can see both these things working in tandem, but the hero brand if I'm being candid really has become ITV from a national perspective. I look at my kids when they view television, there's not a great deal of channel loyalty there, they're on the EPG as quickly as they can and they know exactly where the programmes are, but in Tyne Tees, in Granada, in Yorkshire we have strong brands and certainly when we're outwardly facing to the consumer and the viewer in those regions they're still very important brands.
[Andrew ?] We've had fantastic partnerships with Tyne Tees and BBC and even Channel 4 on creative contemporary production, and one of the things that alarms me, and makes me think David Puttnam might have been right in that all you've described is about news and locating the regions within essentially (if I may use the expression), divisions, and I want to ask what your mechanism is going to be for spotting creative talent — things like Billy Elliot being written in a theatre down the road from here, like the work that's coming out of individuals, either writers or director/producers in the region.
Well, I think to deal with the news thing first. What we're trying to do is create a new news entity. As I said in the speech, what we're not trying to do is to dictate from London — I mean, certainly you know news and the editorial will be controlled within the regions. Across the eleven licences that we now have there is a huge differential between the licences, there are the haves and the have-nots in terms of the equipment and the technology which we want to very quickly change and upgrade the whole process. But I think also for the talent in the business we want to give a real sense of being able to sort-of move through the company. You know (I think) if you're in the BBC there is a sense that you can progress — you could start your career here and progress to a number of areas around within the BBC and then to potentially come back here. I think within ITV what we found more so is that you know people have left Tyne Tees to go somewhere else or left Border to go somewhere else, and I think by actually sort-of creating a frame with the company that talent can be spotted, can be utilised elsewhere and have a real career path.
I'm interested in how you get hold of that creative content and that creative talent which is actually the lifeblood of television and film media in the world.
Well, within the region I mean our team will still be here — they'll still be interacting exactly the same way as they are now. This is very much about sort-of Backer House, this is about trying to give on-screen look, a sense of trying to get the quality... the quality which is on the national basis and the look and the feel as much as we can improved around the country, and I think to Tyne Tees' credit the quality is very high. If you go to some of the other regions around the country it's not, so there is a lifting of quality. In terms of sort-of access to talent and partnerships in talent, that's still going to be very much encouraged because the team on the ground will still do as they do now. Nobody's trying to change the editorial, the relationships that currently exists in each of the licensed regions. I think for us that gives us a USP and if we take it away I think we lose something.
[Annie Wood, Northern Film & Media] Northern Film & Media is the regional screen agency for this area, and we've worked effectively in partnership this year with Tyne Tees Television on a creative content series called 'Hothouse'. The media economy in the region we think is valued at about £120million,