Yorkshire Tyne Tees TV always looked a good bet to be the first ITV station to crack under the commercial pressures of the web’s new regime, and so it has proved.
Chairman and chief executive Clive Leach was axed Monday after the company revealed last week that it was heading for a pre-tax loss in the 1992-93 fiscal year instead of the expected profit.
YTT-TV’s two largest shareholders, Pearson and London Weekend Television, forced Leach to take responsibility for the deficit, which was caused by irregularities in the way the company sold its advertising airtime.
The company, which holds two ITV franchises in northeast England, oversold its airtime to advertisers and failed to meet its ratings targets, resulting in a huge revenue shortfall estimated by analysts at over $ 20 million.
It also attempted to bolster its flagging 1992-93 revenues by giving advertisers deep discounts for advance airtime bookings made for the following year. But the LWT subsidiary Laser Sales, which took over the job of selling YTT-TV’s airtime on Oct. 1, the beginning of the new financialyear, refused to accept this arrangement, triggering the current crisis.
License bid blamed
The fundamental problem that forced YTT-TV into such contortions dates back to the 1991 ITV license auction, when Yorkshire and Tyne Tees, then separate companies, both bid extremely high to retain their neighboring broadcasting franchises in northeast England.
Together, the now-merged companies must pay about $ 80 million a year to the government for the right to broadcast — compared, for example, to the $ 3,000 bid by ITV’s largest station, Central TV. Many observers at the time regarded Yorkshire’s bid as financially unviable — indeed, the Independent Television Commission came close to rejecting the bid for that reason.