Some mornings, ITV bosses must dread going to work: another day of sliding share prices, dwindling ad revenues and howl-s for regulatory respite.
The exception is Zai Bennett, who also runs ITV2, the UK's top-rating non-terrestrial network. Having seen off Sky1 and E4, the 10-year old channel has even, on occasion, outshone terrestrial rival Five.
'ITV2 is stronger than ever,' says Bennett, who became controller in 2006. 'In 2007-08, 96 of our shows attracted more than 1m viewers. We have shown we can attract big, young audiences.'
It wasn't always thus. Born on 7 December, 1998, ITV2 was a sickly child, recalls former ITV Broadcast chief executive Mick Desmond. 'It wasn't helped by the fact that ITV had three shareholders, Granada, Carlton and United News & Media,' he says. 'This meant there wasn't a coherent strategy, either editorially or in terms of selling to media agencies.'
Editorially, says Desmond, ITV2 didn't take advantage of the ITV1 mothership's brand strengths. While channel chief Brian Barwick migrated some viewers to ITV2 with live sport originations, such as Bedrock, other shows such as Football Crazy and Soap Fever failed to woo the audience. Not that there was much audience to woo because ITV2 was strapped to the hull of ONdigital, Granada-Carlton's rapidly sinking pay-DTT platform. With ITV2 a notable absentee from the Sky platform, it meant audience share and ad revenues were minimal, acknowledges Desmond.
But then everything changed, says Bennett, who at this point was rising through the ITV ranks. 'In 2001, ITV2 joined the Sky Digital platform, which gave an immediate boost in household penetration. It was also the time of the first big brand extension, Pop Idol Extra, which attracted 2m viewers.'
The spin-off formula was later repeated with The X Factor and I'm a Celebrity Get Me Out of Here!, says Andy Zonfrillo, investment director at media agency MindShare. 'That helped ITV2 establish itself with 16-to-34s,' he adds. 'However, a bigger factor was the growth of free-to-air platform Free-view. When Freeview gained moment-um, viewer share at ITV2 took off.'
In 2004, ITV doubled ITV2's budget and did a deal with Sky, which secured high-profile carriage for ITV3. For Bennett, this was a watershed. 'The creation of ITV3 and ITV4 was important because it shifted drama and football out of ITV2 and allowed us to hone our proposition,' he says.
'More money was ploughed into commissions, brand extensions and acquired shows.'
ITV2 looks in good shape, according to Zonfrillo, but he warns that the next phase will be tougher. 'The UK is moving toward total digital penetration, which means no leaps by joining a new platform,' he says.' The emphasis will switch to content and marketing.'
Bennett acknowledges the point but does not believe ITV2 has hit the ceiling yet. The channel has a fresh look and is pushing content via social networking website Bebo. With a £65m programme budget a year, Bennett has invested heavily in comedy, and delivered ambitious shows, such as the Billie Piper drama, Secret Diary of a Call Girl. Coming up in January is the Paris Hilton reality vehicle, British Best Friend.
This is all well and good, but it could be argued that ITV2 has accelerated the decline of ITV1. With ITV1 airtime still sold at a premium, does ITV2 simply offers agencies shows such as Call Girl at a discount? Bennett says not. 'ITV spends so much on content that one channel can't do it all justice. The digital channels help us to leverage our assets effectively,' he argues.
He also contends that the channel has allowed the group to better deliver to youth audiences. Could it become a nursery slope for talent, mirroring the BBC model? 'We'd all love that to be the case,' says Bennett. 'But it can't distract us from our job of delivering for ITV2.' N
ITV2 averages a 2.3% viewing share. In 2008 to date, 12m 16- to 34-year-olds have watched ITV2. It now has 700 advertisers, including P&G, Tesco, L'Oreal, Kellogg and the COI. At its launch, ITV2 had 200 advertisers including Mars and Carlsberg-Tetley.
Since 2005, ITV2 hits have included catch-up shows for I'm a Celebrity Get Me Out of Here!, Footballers' Wives Extra Time and Secret Diary of a Call Girl, all pulling 2m viewers.
Bionic Woman this year gave ITV2 its biggest-ever audience, with 3m. Audiences for the Katie & Peter franchise have risen from 429,000 in 2005 to more than 1m this year. In 2009, the Katie & Peter bandwagon will visit LA.