Here’s A Tip For Commercial Broadcasters On How To Improve TV Ratings And Probably Save Some Money At The Same Time – Cut The Kids Programming, Or At Least Send It Over To Digital Platforms

Philip Stone July 5, 2007

ITV, the UK’s largest commercial network presented what it called good news this week – ratings at its prime network were down only 5.6% for the first half of the year. The reason the network is so happy is because for the same period last year the ratings were down 9.1%, so the situation is at least stabilizing and given the massacres in the UK television advertising economy one has to look for silver linings, no matter how meager.

One way the network managed to stop the ratings freefall was to axe most of its children’s programming in the afternoon from its main terrestrial channel and leave it to its digital kids channel to take up the slack. So now in mid-afternoon instead of Spongebob Squarepants, Curious George and the like on terrestrial TV its repeats of old, trusted, popular, police drama series such as Inspector Morse. 

And the result: “ITV1 has successfully regained audience share in the afternoon,” the company said in its report covering the first half of the year. That ITV1 5.6% total audience share drop in the first half gives it  a total 32.3% share, but when compared to the 9.1% drop for the same period last year this week’s figures were considered a big success. During the good old days ITV and BBC basically split the ratings.

ITV has already closed its children’s production arm and whereas it spent some £35 million ($70 million, €52 million) three years ago on children’s programming this year the figure is closer to £5 million ($10 million, €7.4 million) for its CITV digital offshoot.

ITV has a responsibility for children’s programming under its public service remit, but CEO Michael Grade says it also has a fiscal responsibility to its shareholders and it is irresponsible to continue with programs that don’t do the best for the bottom line. The Ofcom regulator is mulling it all over.

Of course, one could argue this is one perfect reason why the UK has a public service broadcaster like the BBC that has loads of children’s programs on its terrestrial (not digital-only) stations. But the BBC is also very keenly competitive in the ratings race, and it has its own financial problems. In view of what ITV is up to the BBC has said it, too, is looking into shifting its kids programs to digital in order to win back that lost terrestrial afternoon share.

And that, of course, is one of the prime challenges these days for a public service broadcaster – ratings be damned and provide the public service to the kids on terrestrial channels, or ratings are everything and move the kids over to digital?

Sponsorship of kids programming in the UK has struggled since April when a new Ofcom rule took effect that TV advertisements for food containing high levels of fat, salts, and sugar were no longer allowed in or around TV programming aimed at children from preschool to aged nine, and now raised this month to 15.

But there’s a nifty catch – it applies to programming aimed at the kids and yet research shows that most of the shows popular with kids are actually aimed at their parents so those shows don’t get quarantined.

Ofcom is nervous about ensuring ITV stays financially secure. It had seriously discussed whether to ban all fatty food advertising in programs shown before 9 p.m., but then considered that the lost revenue to broadcasters was too severe. But there is still a big lobby out there that wants to see that 9 p.m. rule imposed.

And as yet another example of how things are, ITV boasted in its trading statement that its advertising revenues for the first half of the year for all its services was down just 5%  -- a sign of stabilization – although its main station, ITV1, was down 9.6% compared to an 8% decline during the same period last year. That really shows there are still many problems at the flagship station since the total overall UK TV ad spend was down just 0.3%. But ITV says its July numbers are booked to come in around 10% higher than last year, and the really good news is that its digital stations revenue is up 24%.

For all its investment in digital and the Internet, and the increased revenues digital is producing, the overall audience share for ITV’s total portfolio of stations was down 3.1% to 41.5%. The company has said it wants its digital operations to make up 50% of the company’s revenues as quickly as possible, understandable since the flagship station still accounted for 86% of the 2006 total ad sales. ITV absolutely has to get that station right again.

To do so it is spending big on better programming and it is continuing with its £40 million cost cutting program. At ITV1 net advertising revenue for the first half was £595 million and the digital operations added another £122 million and of that the network says it has spent around £500 million in program investment during the same time.

Part of ITV’s problem is that Internet advertising in the UK has proven so successful that it now accounts for more than half of all online ad spending in Western Europe, and is forecast to rise to a 52.6% market share by 2010, according to eMarketer. Some of that is new money but a lot is spend diverted from traditional media.

Further advances in broadband, mobile Internet access and associated ad-serving technology will help fuel this growth, according to eMarketer, and that’s one reason why ITV is revamping its web site to include the streaming of its channels, plus play on demand.

Coming off 47% growth in 2006, online ad spending in the UK will rise from £2.6 billion ($5.2 billion, €3.85 billion) in 2007 to £4.5 billion ($9 billion, €6.67 billion)

Overall UK advertising increased 3% in Q1 over the same period a year ago, the largest Q1 increase since 2005, according to the Advertising Association and yet television still showed an overall 0.8% decline. Internet advertising on the other hand grew a whopping 42% in the same period.

No wonder ITV is saying that if you can’t fight digital, then become a major digital player yourself.