Shopping for a way to save ITV

Former Royal Mail topper Adam Crozier gets web's CEO job

The U.K. was famously described as “a nation of shopkeepers” by Scottish philosopher Adam Smith in 1776.

Now ailing commercial broadcasting giant ITV is being run by two: chairman Archie Norman, the former Asda supermarket titan, and the man he has chosen as CEO, Adam Crozier, former topper at Blighty’s Royal Mail postal service.

Can Crozier, himself a Scot, deliver the much-needed turnaround in fortunes at ITV? That’s the question the TV biz is asking following his appointment on Jan. 28 — which leaves the network without a creative at its helm.

Crozier, 46, has not worked in the media since running advertising agency Saatchi and Saatchi a decade ago.

Norman, who was appointed in November and took up his job Jan. 1, reckons that Crozier is the person to lead ITV’s “transformation,” but has provided little insight into what this will entail.

If Crozier applies the same methods to ITV as he did to the Royal Mail, it means more cuts.

At the Royal Mail, Crozier closed around 5,800 post offices and ended second daily postal deliveries. Costs of posting a letter rose dramatically and thousands of staff lost their jobs.

But he turned round the loss-making service to the point where it makes a profit of £1 million ($1.6 million) a day, something ITV investors would love.

“Everywhere he’s gone, he’s been an agent of change,” says Paul Richards, media analyst at Numis Securities.

“I expect he’s been hired by ITV to deliver something that is more of a revolution than an evolution,” he adds.

ITV’s last two CEOs, Charles Allen and Michael Grade, were both unable to deliver the kind of growth demanded by investors.

Will Crozier’s fate be any different?

In announcing Crozier’s appointment, Norman stressed the broadcasting business was performing well — ITV’s advertising revenue has picked up of late — but ITV needs to wean itself off its dependence on advertising.

“We need to build a substantial international content business,” added Norman, not the first ITV topper to have such an ambition.

Both Allen and Grade tried to beef up ITV’s overseas activities, both as a distributor and a producer.

However, the results were mixed and Grade was forced to abandon growth targets for the content business.

Part of the problem is that as so much creative and entrepreneurial TV talent has moved to the independent sector, far fewer of ITV’s shows are made in-house than they once were.

ITV supplies around 40% of the shows for its flagship web, ITV1, compared with around 60% five years ago.

The web’s biggest show, “The X Factor,” is a co-production between Simon Cowell and Talkback Thames.

ITV makes ratings topping blue-collar soap, “Coronation Street,” which celebrates its 50th anniversary this year, but this kind of fare will never be an international money-spinner.

One option open to Crozier is erecting pay walls around some of ITV’s channels, but this risks jeopardizing advertising money.

Another option is to sell or merge production arm ITV Studios, a strategy favored by an influential group of investors including U.S. stockholder Fidelity.

According to reports in local media these shareholders want the execs to examine three options.

These are: a sale of the production business for an estimated £700 million ($1.14 billion) to a rival; a separate listing for ITV Studios on the London stock market in which current ITV investors would hold shares; or a partial sale or flotation that would allow ITV to retain a controlling stake.

But the betting is that the new ITV toppers will attempt to stay in content creation and hope to introduce fresh creative talent, most likely from independents, and provide hefty financial incentives if they deliver.

Some encouraging news for Crozier is that the steep audience fragmentation that Allen and Grade had to endure has reached a plateau now that 90% of U.K. homes are plugged into multi-channel TV.

“One wishes Crozier and Norman well,” says Steve Hewlett, a former ITV program topper turned media consultant.

“But the question strategically is, what can they do that both Allen and Grade didn’t try and make ITV more effective and please investors?

“Apart from a sale or partial sale their options are extremely limited.”

Allen gave Crozier and Norman a vote of confidence in interviews with the local press, describing them as “very experienced and talented executives with a strong track record in a range of businesses.”

And here lies their strength: In a multi-channel world, both Crozier and Norman are shopkeepers and brand men — they know how to sell.

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