ITV: 'Failure is not in my vocabulary'

as the axing of Doctor Who in the 80s and the introduction of Roland
Rat. It all gives the impression of a TV luvvie par excellence.

It also does Grade a disservice. Behind the hype lies a sharp,
unflappable businessman. In the eight months since he abandoned the BBC
for ITV, it has undergone a root-and-branch strategy review, culminating
in his presentation of a five-year recovery plan to the City earlier
this month. The targets are bold, but what is most interesting is that
the plan is content-led and based on self-help rather than cost-cutting
and lobbying for regulatory change - a marked change from the
presentations given by his predecessor, Charles Allen.

Unlike Allen, Grade displays a genuine passion for TV along with an eye
for what the public wants to watch and advertisers want to buy. He is
popular among staff, and his plans make it clear he believes there is a
future for the 52-year-old broadcaster. After ITV's strong summer, he
has won the benefit of the doubt. But as he admits, there is still
plenty of work ahead.

Q: Why did you join ITV?

A: My whole career has been based around joining companies as they
plateaued. All my jobs have been about getting established businesses up
when they were about to go into decline. Obviously there's a huge
emotional hook to ITV - there's a family connection and I learnt my
craft at LWT. And to be absolutely blunt, it was driving me crazy
watching the business struggle.

Q: What did the ITV brand mean when you took the job?

A: Much like Marks & Spencer, ITV had a big place in the public's
affections, but it kept on disappointing. When M&S struggled, people
would go in and there would be nothing to buy, but they kept going in
hope. That was where ITV was going.

Q: What would you like it to be when you leave?

A: The first and biggest source of entertainment for the British public.
That's what we've built our reputation on. ITV will be where you come
for free, best-value British content.

Q: How does your approach differ from Charles Allen's?

A: I could never have done what Charles did in terms of painstakingly
negotiating the merger with all the stakeholders, the politicians and
regulators. He was the master of that. But there comes a point where you
need to grow the business. We've done the cuts and got some, but not
all, of the regulatory concessions; now we need to grow the top line.
We'll do this through content, and that's where I come in. I don't think
he could do what I could do and I couldn't do what he could. So he was
the right man for his time, and I hope I'm the right man for my
time.

Q: Was the Contract Rights Renewal system a price worth paying for the
merger?

A: It was a reasonable expectation at the time that the remedy would be
reviewed after three years. What wasn't factored in was the pitiful
performance of ITV on-screen and the very soft ad market - the two
together formed a perfect storm, with hundreds of millions of pounds
disappearing from ITV. It's a pointless exercise asking 'should we have
done this, should we have done that' - we did it and we're in it. All my
energy and thinking time is spent on how we can get a result that
advertisers are comfortable with and confident in and that will enable
us to do what we have to do, which is to innovate and maintain our
present level of investment.

Q: What form would you like a 'son of CRR' to take?

A: Obviously we are working on different models, which we will put in
the public domain when they are ready. But advertisers have long
memories. They won't forget the old bad habits of ITV - arrogance,
rampant inflation - and that's understandable. Nobody was going to
support the abolition of CRR, so let's find a mechanism that gives
advertisers comfort that we won't misbehave. At the same time a more
sophisticated formula will allow us to be rewarded for delivering value
for advertisers, which currently we're not.

Q: Are there any concessions you are prepared to make to advertisers for
them to support a change to CRR?

A: It's not down to me - everybody will put their evidence in. We'll put
our suggestions and arguments to the Office of Fair Trading. I'm sure
ISBA and individual advertisers will too. It's down to the OFT and the
Competition Commission to work their way through it. I very much doubt
there will be consensus. I think it helps our argument that advertiser
confidence in ITV has returned. We have to go on earning that through
our performance next year, but I do feel a sense of confidence returning
from conversations I have had with the chief executives of big
advertisers. They have told me they like what I'm doing.

Q: Do you think advertisers were neglected in the past?

A: No, I think our product wasn't right. We were distracted by the
merger.

Q: Will a change to CRR mean ITV can charge ITV1 prices for its other
channels?

A: The market decides the price. It's a market now - it wasn't years ago
because we pretty much had a monopoly, but that's no longer the case.
Advertisers have plenty of choice, and they exercise that. We can't fix
the price, as they don't have to pay it.

Q: Your target is a 38.5% share of commercial impacts by 2012 - that's a
pretty dominant position, isn't it?

A: But that's not the market - the market now is Google and everybody
else. Google is now bigger than Channel 4. Every advertiser is looking
at the web to see what that will give them, and that diminishes our
pricing power. Our pricing power has diminished dramatically over the
past five years because there is so much more choice for
advertisers.

Q: Do you think that the regulation of advertising has gone too far?

A: I think we are in a dangerous period where politicians, in the face
of intractable problems and the general media clamour to be seen to be
doing something, have taken a free hit at the advertising sector to give
the impression that they have done something. That is disingenuous, and
we, as an industry, have to argue against it. Advertisers are the major
employers in the economy; they create wealth. It's one thing if there is
evidence that it will work, but just taking a political swipe at
advertising because politicians feel powerless to do anything else
treats the audience with contempt and utterly misunderstands the purpose
of advertising. It has to stop.

Q: Are you worried about further restrictions?

A: Very. The industry - us included - has been hopeless at making its
case. We have to get our act together. I've been thinking a lot about
what contribution I can make to stop this rather disingenuous approach.
There is now a queue of special-interest groups wanting to flex their
muscles and attack the ad industry, especially alcohol ads. It's as if
before television there was no drinking. The notion that by curtailing
advertising you'll stop people drinking is preposterous and
intellectually bankrupt.

Q: What is ITV's online strategy?

A: We like the free advertiser-supported model. We think that we are a
trusted media owner and can drive massive traffic to ITV.com through
cross-promotion, our programme brands, rich content, catch-up and
archive. We think we can offer advertisers a really clear-cut,
simple-to-buy, simple-to-transact ad proposition on the web, and that's
what we aim to do. Getting our act together on the web will be the
catalyst for growth in that sector. I want ITV to drive it.

Q: Why are you concentrating on returning drama to the ITV1
schedule?

A: 9pm is crucial. It is when most people who advertisers value the most
- light viewers, ABC1s and 16-34s - are viewing, and, frankly, our
offerings have not been good enough. People have been watching Life on
Mars, New Tricks, Hustle; ITV midweek has been a bit thin.

Q: Has ITV been reliant on too few formats?

A: We've done too many shows that are poor clones of other people's
ideas. We've stayed with shows too long that are past their sell-by date
and that have been risk-averse. Innovation is the life-blood of our
business, and there has not been nearly enough on ITV.

Q: Will you start doing fewer reality and celebrity-fronted
programmes?

A: It depends on the idea. If the idea is good enough, original enough
and 'ITV' enough, we'll do it. I remember somebody in Hollywood who was
running CBS announced that the age of the sitcom was dead - two years
later there was Friends. Every idea will be judged on its merit; what we
don't want is copies of other people's shows unless there's a real twist
that makes it better, such as Dancing on Ice, which wouldn't have
happened without Strictly Come Dancing.

Q: Do you think other broadcasters are trying to take on ITV at its own
game?

A: I hope so. Competition for ad revenue is good for the consumer and
it's healthy. We must have confidence in our own abilities and stop
worrying about what everybody else is doing. I don't give a toss what
anybody else is doing, I worry about what we are doing. I want them to
worry about us for a change.

Q: You have said you will leave ITV by 2010. How will you judge whether
you've been successful?

A: I won't judge me. The City will judge me and the viewers will judge
me.

Q: Will you resign if you don't meet your targets?

A: I don't countenance the prospect of not getting this business
growing. Failure is not in my vocabulary.

ESSENTIALS - ITV STRATEGY

- The key targets in Grade's five-year recovery plan are: annual revenue
growth of 3%-5% to 2010, then 5% to 2012; to double revenue from content
to £1.2bn; to gain a 38.5% share of commercial impacts; and to
triple online revenue, including from Friends Reunited, to £150m.

- The goal is to achieve this recovery through high-profile content
capable of delivering mass audiences across multiple platforms.

- To help pay for it, Grade plans to slash ITV's regional programming
budget by £120m. However, online service ITV Local will be boosted
as the broadcaster targets the online classified market.

- ITV will pour an extra £20m into the programming budget for
ITV2, which the network believes can overtake Five among the 16-34
demographic.

- For more on Michael Grade and ITV's future strategy, go to
www.brandrepublic.com/michaelgrade.