ITV: Size Matters in America for Studios Arm

ITV: Size Matters America Studios Arm

“Five years ago it was unthinkable we would be this size in America,” says Kevin Lygo, head of ITV Studios. It is hard to disagree. In 2010 most pundits had written off ITV in the U.K., never mind across the Atlantic. But under the single-minded management of CEO Adam Crozier, ITV has morphed into a dynamic, forward-looking company that runs a production business of genuine international heft.

Lygo’s 12th floor office gives visitors an unmatched view of the London skyline, but these days the veteran British TV executive’s ambitions extend beyond the local horizon.

ITV Studios’ latest acquisition came last month when it paid $530 million — a fee that could rise to £1.17 billion ($1.7 billion) provided certain performance targets are met — for “The Voice” producer Talpa, owned by John de Mol.

Lygo is as likely to be found in Manhattan or Culver City as he is in London’s Soho where TV types congregate.

Thanks to an acquisitions spree, ITV is the largest producer of non-scripted TV in the U.S. “Duck Dynasty,” “Cake Boss” and “The Real Housewives of New Jersey” are all made by companies majority-owned by ITV Studios.

The buying binge began with Gurney Prods. (producers of “Duck Dynasty”) in December 2012 when ITV invested a relatively modest $40 million in the Los Angeles-based shingle.

It then got into its stride by acquiring High Noon Entertainment (“Cake Boss”), Thinkfactory Media (“Hatfields & McCoys”) and DiGa Vision (“Teen Wolf”).

A year ago, Lygo upped the ante still further when ITV Studios bought 80% of Leftfield Entertainment (“Pawn Stars,” “Real Housewives of New Jersey”) for a hefty $360 million.

As a business, ITV Studios has trebled in size during the past five years. In annual results announced in March, ITV Studios’ revenue was up 9% to $1.4 billion.

The strategy to invest in factual producers across the Atlantic was borne out of necessity. ITV’s advertising biz was hit hard by the 2008 global economic crash like most free-to-air broadcasters.

To protect the business against further downturns in the ad market, Crozier decided ITV needed to boost revenues from other sources.

“Adam and I both realized that ITV Studios was a sleeping giant,” Lygo recalls.

Expanding production activities in the U.K. (ITV Studios makes shows for the main domestic broadcasters) and overseas — primarily in the U.S. — was vital if ITV was to future-proof itself.

“It’s quite difficult to grow the broadcast business much bigger so you’ve got to go international,” Lygo says. “The U.S. is the touchstone of how successful an international company is. We want to be an international studio of size and quality based in the U.K., but we have to be successful in America and be taken seriously in both scripted and unscripted.”

Last summer, with the scripted part of the equation in mind, ITV Studio’s U.S. arm announced a joint venture with veteran producer Marty Adelstein, dubbed Tomorrow Studios.

Their first drama is “Aquarius,” based on the story of the Charles Manson murders, starring David Duchovny and written by John McNamara. It is due to bow on NBC this spring.

Lygo is under no illusions that succeeding in drama and comedy involve bigger risks than making factual TV.

“You get a commission in unscripted and it’s champagne corks and off you go,” he says. “But when you get a commission in scripted, that’s when you start to worry. You’ve got the deficit finance to worry about …”

Someone as savvy as Lygo also knows that despite ITV’s Studios remarkable progress in the past five years, in a hit-driven business like TV there is never any room for complacency.

One as yet unfulfilled ambition is to produce a show broadcast on ITV that then goes on to create a big wave internationally. The closest ITV Studios has got to an international breakout hit is “Mr. Selfridge,” above, the drama set in the London retailer and starring Jeremy Piven.

ITV also craves a big entertainment show like “The Voice” or “Big Brother” — and hopes de Mol can again deliver. This is why it has bought Talpa.

“People can see we are a serious player now. We’ve shown this by spending lots of money and managing our companies well,” Lygo concludes. “We’re not a private equity company or a bank looking to sell. We are the end user.”

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