ITV's Jones and Desmond slam Elstein's sales plans
LONDON – ITV managing directors Clive Jones and Mick Desmond have slammed David Elstein's plans to spin off the network's sales houses, part of his alternative plan for ITV, which he believes will save the network £100m.
In a comment piece in the Financial Times, responding to remarks Elstein made in a report by Enders Analysis, Jones and Desmond call Elstein's plans for ITV "patchy, blurred and full of repeats".
Elstein's plans involve replacing the proposed management team of Carlton Communicatons' Michael Green and Granada's Charles Allen and saving £100m largely by halving the number of staff at the sales houses and reducing in house commissions.
This amount is around twice the savings Carlton and Granada have identified.
Under Elstein's proposals these savings would be achieved by spinning off the sales houses and getting rid of its regional sales model, using a national team instead, slashing jobs from 450 to 270 to save £20m.
The managing directors called his analysis of the sales houses "wide of the mark". They defend the current structure of ITV's regional sales houses as they generate 10% of revenues -- "the equivalent of half of Five's income," the pair said.
They attack proposals to reduce transmission costs and sports costs as copying what ITV is already doing.
"Granada and Carlton have already centralised transmission at two centres and the costs of the NTL transmission contract are falling and regulated, so good luck to that one."
They point out that Elstein's plans to cut £20m-£30m in sports costs, though retaining Formula 1 and Champions League, "should not be mistaken for ITV's current strategy, which is to reduce investment in peripheral rights and focus on F1 and the Champions League".
While his idea to integrate regional and national newsgathering has "only been made possible by effective lobbying of the government by ITV and ITN".
They defend the current system of commissioning programming from Granada's TV production house as the channel's most cost-effective producer.
The Competition Commission filed its report to the Department of Trade and Industry yesterday, just ahead of the due date of August 26. The DTI has around 20 days to consider the investigations and the final decision is expected in mid-September.
The ITV merger is expected to be given the green light. However, what is not known is what conditions the OFT will attached to it to prevent the company from forcing up the price of airtime, or at least appease opponents of the deal.
The commission has suggested two possible solutions. The first proposal would see a minimum amount of ITV's airtime auctioned off each year to a third party, which would then be sold to a secondary market.
The second would allow advertisers to renew share deals, but based on the same terms as previously agreed. Advertisers would also be allowed to reduce the number of ads shown if ITV's share of viewers decreased, without losing their discounts. Share deals give advertisers discounts over a period of time if they agree to spend a certain amount of money.
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