U.K.’s ITV Aims to Build a Worldwide Supermarket

Firm buys U.S. reality shingles as its studio arm looks to produce more global hits like 'Mr Selfridge'

Mr Selfridge

The desk of ITV Studios’ topper Kevin Lygo is bare apart from a DVD of the first season of “Mr Selfridge” (pictured above), the period drama the studio produced, starring Jeremy Piven as the American entrepreneur who transformed British shopping habits with his eponymous department store.

The 1900s-set show has sold to more than 35 territories including the U.S., where PBS airs it on Masterpiece Theater. The success of the ITV Studios’ drama is further proof that U.K. free-to-air web, ITV, is finally reinventing itself following too many false dawns.

“Mr Selfridge” encapsulates a key part of what ITV wants to do more of — produce inhouse U.K. hits that can sell strongly overseas. Using this strategy, ITV is building its studio business at home and abroad by careful acquisitions and organic growth.

“ITV Studios wants more shows that resonate internationally,” explains Lygo. “We’ve done very well with formats like ‘Hell’s Kitchen’ (on Fox in the U.S.) and ‘Come Dine With Me,’ but perhaps less well with drama, although ‘Titanic’ is another big seller overseas. I’m confident there will be more ‘Mr Selfridges,’” he adds.

Among the reasons for Lygo’s confidence is a spending spree in its biggest international market — the U.S. On May 13, ITV bought a controlling stake in U.S. reality producer High Noon Entertainment for £25.65 million ($39 million). In December, it acquired 61.5% of U.S. shingle Gurney Prods., best known for ‘Duck Dynasty.’ Another U.S. buy is believed to be on the horizon as ITV Studios beefs up ITV Studios America.

“The two U.S. acquisitions are pretty sound,” says Tim Westcott, senior TV analyst as IHS Screen Digest. “They both specialize in high-volume, low-cost reality shows that have a natural market in the U.S. and perform well internationally.”

These and another recent purchase, U.K. reality production company the Garden, are all part of ITV’s drive to boost production overseas to protect itself against the vicissitudes of the domestic advertising market, its core biz.

In common with many Western media companies, the 2008 financial crisis, combined with a lack of new hits, saw ITV’s stock price slump to an all-time low of 23 pence (35¢) in February 2009.

Four years later under the new management team of chairman Archie Norman and CEO Adam Crozier, the stock price hovers around $1.97. Revenues at ITV Studios, which also has bases in the U.S., Germany, France, Australia and the Nordic countries, were up 16% to $1.1 billion last year. And ITV Studios and Israel’s Reshet last year agreed a deal to co-develop shows for the local market and for global export.

With all this going on, ITV is forecasting double-digit growth for the studio biz again this year.

Crozier recruited Lygo in 2010 from Channel 4, to work alongside ITV director of TV Peter Fincham, one of the few survivors from the old regime.

To a large extent, ITV’s schedule still relies on old warhorses like reality behemoth “The X Factor” and blue-collar soap “Coronation Street.” But the web’s contemporary crime sagas are winning ratings and kudos alongside its period pieces “Selfridge” and “Downton Abbey,” greenlit by Fincham and made by NBCUniversal’s British producer, Carnival.

An example is brooding drama “Broadchurch,” produced by Kudos, and influenced by Scandi dramas like “The Killing.” Ideally the show would have been made inhouse by ITV Studios, but regulators require Fincham to take at least 24% of the schedule from third-party producers.

For Lygo, the work at ITV Studios is far from complete. He knows that before he can truly declare the production arm is delivering on all fronts, the studio needs two or three dramas that can join “Mr Selfridge” as international hits with the potential to be big sellers. Just as the U.S. entrepreneur didn’t revolutionize the British retail business overnight, so the new regime at ITV knows that rebooting itself for the modern millennium is a goal that will come over time.