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Leadership Shifts at ITV, Channel 4 May Signal That U.K. Broadcasters Are at a Crossroads

Vacancies at the top of British broadcasting don’t arise very often — and then two come along at once. Earlier this year, the heads of big commercial broadcasters ITV and Channel 4 announced within weeks of each other that they were quitting, setting off a leadership scramble at a time when the industry was already undergoing dramatic change. With ad revenue and audiences increasingly moving online, the broadcasters’ new bosses look set to preside over defining moments for each of their organizations.

Channel 4, the new home of “The Great British Bake Off,” has tapped seasoned TV exec Alex Mahon to take over from David Abraham in the fall. No replacement has been announced yet for Adam Crozier, who exits ITV’s headquarters for good June 30.

His departure after seven successful years at the helm has intensified talk of a sale of ITV. But one of the biggest prizes in Europe’s most valuable television market comes at a hefty price: With a market cap of £7.5 billion ($9.6 billion), ITV will cost a buyer about $15.3 billion. Still, with the pound at a historic low against the dollar in the wake of last year’s Brexit vote, that’s less pricey than it used to be for international suitors. Comcast, Discovery and Liberty Media —which already has a 9.9% stake in ITV — are all rumored to be interested.

Crozier admits that the cheap pound has provided fresh impetus for potential buyers but denies that a sale is a foregone conclusion. “I don’t think it’s inevitable,” he said recently at a media conference in London. He also dismissed a suggestion by Liberty’s John Malone that ITV is overpriced. “I could argue we are undervalued because of very short-term issues around advertising. Perhaps ITV is just too expensive for them.”

Analysts side with Crozier. Ian Whittaker, head of European media research at investment bank Liberum Capital, says ITV is an attractive asset. “People have focused on the fact John Malone has said ITV is overpriced more than the fact that he has said he wants to buy it,” Whittaker said. “Why would he hold 10% if he wasn’t interested or didn’t think someone else was?”

Numbers Game
Speculation is rife that ITV might be on the market, but the price won’t be cheap.
$9.6b ITV market cap
$15.3b Likely cost of ITV to a potential buyer
9.9% Liberty Media’s current ITV stake

The choice of Crozier’s successor will give an indication of whether a sale is in the offing. ITV could cast an eye outside the industry for a new CEO, as it did with Crozier, or even beyond the U.K., given that a sale is likely to involve an international buyer. Regardless of the person’s nationality, Whittaker said, investors want a “safe pair of hands” as they seek reassurance in a rocky ad market.

Mahon, who will take over at Channel 4, currently heads VFX firm The Foundry and is well-known in TV circles as the former CEO of Shine. Channel 4’s mission, as a commercially funded public broadcaster, is to “be innovative and distinctive,” and her appointment has been well-received; former Channel 4 staffers say that looking outside the channel for a new boss was the right move to usher in “creative renewal.”

Immediate challenges confronting Mahon include handling a possible government-ordered move outside London and appointing a new director of programs to replace Jay Hunt, who stepped down three days before the new chief executive was announced.

“Alex understands production, has worked with talent and knows what the creative challenges are,” says John McVay, head of U.K. independent producers association Pact. “But it’s not the job of the CEO to run programming. It is to make sure the organization goes in the right direction.  … There is an opportunity to rethink the purpose and remit of Channel 4 in a changed world.”

That changed world has entailed surrendering viewers, and even programs, to online players. Channel 4 lost dystopian drama “Black Mirror” to Netflix. But it’s making its own digital play and, like ITV, is looking beyond Britain by investing in U.K.-based streaming service Walter Presents, which is up and running in the U.S. and globally.

“It’s the first time we have launched a service outside the U.K.,” Abraham says. “The U.S. is a big country. You only need a few percent of the market to have something fantastic.”

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