Government Policies To Have An Impact on ITV

In terms of macro-economic policies, the government”s decision-making is most likely to have a bearing on ITV. While BSkyB”s PayTV subscription revenues seem virtually immune to the downturn, ITV”s ad-funded model is much more responsive to the prevailing economic conditions.

At present, this means strong growth – because the economy”s bounce-back has encouraged advertisers to invest around ITV”s landmark entertainment shows. But if the coalition gets its strategy wrong, either by dampening consumer demand through cutbacks or by allowing inflation to get out of control, then ITV is likely to see a slowdown in growth. This threat is exacerbated by the recent rise in VAT and the fact no major sports events are on the horizon (time differences will adversely impact on the Rugby World Cup, which is being hosted by New Zealand next autumn).

ITV CEO Adam Crozier is conscious of the threat, which is why he is working on a transformation plan which involves increasing the company”s PayTV revenues. But there are also a number of implications for producers. The most obvious of these is increased investment in Saturday night blockbusters like The X Factor, which attract huge sums from advertising airtime. Also likely is a trend towards formattable shows such as Come Dine With Me (ITV production for C4), because these can be sold overseas.  

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