1980s >> 1987 >> no-996-august-1987


Imagine a business where the less that is produced and the fewer customers there are, the more money is made. Impossible, you might say, even within a system like capitalism. But this is precisely what is happening in some regional ITV Companies.

Unlike any other business. ITV companies make one thing (programmes) but sell another — advertising. So it is in their financial interests to cut costs (programme making) and expand revenue (advertising).

So as the quality/quantity of programmes are reduced, audiences have dropped and advertising revenues have soared because advertisers have to spend more to try and attract their target audience. A regional TV station has the monopoly on TV advertising in its area. Advertisers have no option but to go to it. As there is only a finite amount of airtime available, its price gets driven up.

In the case of TVS, for example, which has viewer ratings forty per cent lower than average for an ITV network, this has meant that its share price has been boosted from 25 pence in 1981 to the current 380 pence. Profits have exceeded forecasts in each year of operation, rising to 14 million on a turnover of 140 million pounds last year.

Even the IBA felt moved to say of TVS:

       . . . [it] has undoubtedly enjoyed considerable success in expanding the business side of its operation and attaining high levels of profitability; but the same energy and purpose have not always been fully matched on the programme side. . . .

The mechanism by which this form of decay operates is one of commercial television’s best kept secrets — the Network Agreement. The five largest ITV Companies (Central. Granada. Thames. LWT and Yorkshire) dominate the system. They produce programmes for the entire network. The remaining ten regional companies — for example. TVS — have no such commitment. This assures the big five of a market, while at the same time reducing the outlay of the smaller regional companies on programme making. This cartel has made the ITV Companies very profitable indeed.

It is all the more ludicrous that this situation is administered by the IBA. the very body charged with the statutory duty (sic) under the 1981 Broadcasting Act to secure “Adequate Competition”.

Legal opinion on the Network Agreement varies, but it is probably illegal under UK law. and certainly illegal under EEC law, which would mean that the 15 ITV Companies would be liable to fines of between four and ten per cent of last year’s turnover (£4-10 million). It remains to be seen if the IBA will take such action.

But then, as Margaret Thatcher has assured us, private enterprise means freedom of choice. You have been given an On/ Off switch and you are free to use it. What more choice could you possibly want?

Harvey Harwood