ITV Business Model Under Threat From Multi-Channel TV

ITV could be facing severe financial problems due to the increasing popularity of multi-channel television and the rise of BSkyB, according to former BBC chairman and economist Gavyn Davies.

Speaking at the Said Business School in Oxford last night, Davies warned that the broadcaster’s business model was under threat from declining viewing figures and advertisers seeking to negotiate more competitive deals.

The former BBC chairman suggested that ITV could find itself taken over by a foreign predator as BSkyB increasingly overshadowed it in the multi-channel age. He said: “Sky is becoming a colossus compared to ITV, which now exhibits a business model which is clearly under threat.”

Davies, who was chief economist at Goldman Sachs before joining the BBC, said that the decline of ITV and the rise of BSkyB would make it even more important to protect the BBC licence fee. However, he emphasised that the BBC would be unlikely to ask for a rise in the licence fee for fear of “being launched out of court.”

He said: “I doubt the BBC itself will have the temerity to fly in the face of this misguided tide of chatterati opinion by asking the Government for a licence fee settlement in excess of inflation.”

He added: “But the truth is that no other public service in Britain – not the health service, not the schools, not the army and definitely not the police – would ever contemplate accepting a decade-long settlement in which its income is frozen in real terms.”

Former BBC director general, Greg Dyke, claimed last year that ITV’s relative weakness had led to the British broadcasting landscape being dominated by two ‘800lb gorillas’ in the form of the BBC and BSkyB (see Dyke Calls On Government To Strengthen ITV).

This position was highlighted earlier this week when BSkyB announced plans to launch a free-to-air satellite package of more than 200 television and radio channels to compete with the BBC-backed Freeview service (see BSkyB To Launch Free-To-Air Satellite Package).

ITV is clearly the not the cash cow it once was and the broadcaster’s business model, which was once described as a licence to print money, could be under threat unless it strengthens its position on the emerging multi-channel landscape.

BBC: 020 8743 8000 www.bbc.co.uk

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