Keynote: Adam Crozier, ITV - MIPCOM 2015

Sure. Well, first of all, good afternoon, everyone, and thank you for taking the time to come this afternoon. Yeah, 5 years ago seems like a long time ago now, but at that stage, as you say, the financial markets were in crisis. Advertising had plummeted, as it had done for most broadcasters, and ITV had effectively run out of cash and was in serious trouble. At the same time, it had allowed its content arm, ITV Studios, really to wither for about 5 years even by that stage. So, most of the great creative talent had left, and it had long since stopped investing in great new creative work. And, you know, pretty much everyone I met suggested that the right thing to do, including most shareholders, was to get rid of the sort of old rump of a content arm and really focus just on being a UK broadcaster. But I think even then you could see just how important creating and owning your own content was going to become with all the changes taking place in the world that we all live in now. And so, really, we decided to put content right at the heart of our strategy. And really, our strategy's very simple: create great content, make it famous in our channels, and then sell it around the world. And we've really focused on doing that. A lot of changes happened. You know, 65% of the people who work for ITV didn't work for us 4 years ago. So, 65% of the entire company has changed. And really what we focused ourselves on was getting into good shape, really turning around our free-to-air broadcast business, growing new revenue streams in digital and pay, and then obviously building this international content business. And back then, I think ITV was valued at around 1.5, 1.75 billion pounds. Today, it's worth around 10 to 11 billion pounds. So, we've seen a real transformation in our creative fortunes, our financial fortunes, and the value of the company going forward.

Yeah, it's a big challenge, but it's been good fun. And I think the trick was partly that, of course, while things were in a terrible shape back then, ITV was still this fantastic brand with this great heritage. You know, we're in every living room in the UK every single week. Fantastic share of advertising, around 47, 48% of all the TV advertising in the UK. And partnerships with all the biggest brands in the UK. So, although there was a lot wrong, there was also a lot to build on as well.

Well, I think the interesting thing when we started was that, actually, like a lot of media companies, ITV had said it was going to do a lot of these things before. The difference is that it never actually did them. So, although it sounds a bit dull, we really tried to put in place a lot of building blocks in order to make this possible. First one was to get in great creative leadership, so people like Kevin Lygo and Maria Kyriacou who runs GE. Bringing lots of great creative talent through whatever means necessary. Sometimes hiring them, sometimes setting them up in new companies, sometimes acquiring those companies. Focusing on the key genres: drama, entertainment, factual entertainment. Scripted work that can travel, formats that can travel. Really investing in the product, a lot of investment into developing new ideas and scripts and working with writers. And, you know, building our business and taking advantage of this thing that we have, which is we're an integrated producer broadcaster. So, try to get great work up and running, put it on our channels, make it famous. Then grow into working for other broadcasters in the UK. And then move into international with a particular focus on America. So, we've really built it piece by piece. And, you know, if you look at ITV Studios now, biggest independent in the US, we're the biggest commercial broadcaster in the UK, third biggest distributor in Europe. And we're growing very, very fast. And over half our revenues now come from outside the UK. So, we've really turned it into a genuine global business.

Well, I think the first thing to see all those deals as is talent deals. You know, it's all about having the best creative talents working as part of ITV. As Sophie said earlier, I think creative talent works best when it's in an environment in which it can really thrive. So, we run them all as labels, if you like, and we try to give people their creative and their entrepreneurial freedom to work. Over half our growth has actually come from organic efforts, producing more and more great programs of our own. The other half has come from M&A. And they've all got the same things in common. They're all focused on one of the genres that we thought was key, either drama, entertainment, or factual entertainment. They all had great creative people running them. They had a track record of success. They had a history of investing in great new work and a strong pipeline of ideas coming through. We got to know them as management teams and we felt we could work with them. And we felt we could add value to them and that they would add value to us. So, we've been very careful about the way we've done it. And then we structured all the deals such that if people succeed and they deliver really strong growth, then they do very well out of it. And so, there's a sort of shared view of what success looks like.

Well, it's hard to believe that 5 years ago I think we had no scripted teams in America at all. And in the UK we had three drama teams working in the UK. And if you look at it today, we have around 15 labels working or producing some kind of scripted content. So, we've grown our resource and we've really invested in that resource. And if you look at it now, we've got great dramas that people are aware of like Endeavour or Lewis. And some returning stuff like Poldark and what have you. And some fantastic new work coming through at the moment, Beowulf, which we're launching here this week, Jekyll and Hyde, and Jericho. So, I think we're in a really strong position here and in the US where we've had Aquarius and The Good Witch and Texas Rising and a number of other ones to come. So, I think we're in really good shape and as everyone in the hall knows, there's no shortcut to scripted success. You've got to invest, you've got to have the talent there and you've got to take your time and nurture the ideas through the system. We started on this journey two or three years ago and we're really starting to see the benefit of that now. And I think Beowulf, which we're launching this week, is a great example of that. It's a brand that everyone has heard of. It's a cut-through idea based on the original poem. It's from this sort of mythical world and it's exactly the kind of thing that I think is going to be very heavily demanded right across the world.

Well, the US market is the biggest and most successful market in the world in terms of our industry. I think everyone knows that. And so, in order to really grow, we felt we had to have a real scale and presence there, which we hadn't really had in many ways. And so, we always wanted to focus on the US market and what we could do there. And what we've tried to do is build our presence by working with great people. So, whether it's Brent Montgomery at Leftfield Group, the Guernseys, Scott and Deirdre at Guernsey. So, we've built those up over a number of years. We want to be in all the genres. So, we're very strong in unscripted shows like Pawn Stars and Duck Dynasty, incredibly successful and very important for networks out there. We're moving into scripted now and having some success there. And I think what's helped us enormously is that because we wear both hats, we're a broadcaster and we're a content company, we instinctively know what broadcasters are looking for. And we can often work in partnership with them on projects. But equally, we don't compete as a broadcaster in their market. And therefore, we've been able to work with all the networks. We currently work with more than 45 networks at any one time across all the genres. And we can do that without fear or favor. We can take the right piece of content to the right network, cable company, or online company, to make sure that we can work with all of those people in partnership. And so, I think that's been a huge advantage for us in the US. And we know it's going to take time to build an even bigger scripted presence, but we're perfectly prepared to take that time to keep investing in the product, keep investing in talented people, and hopefully we will see the results of that coming through. It's going to take longer. It's not a case of there being anyone there unscripted really to acquire. I think you really do have to put the time and effort and investment in and then grow the business over time.

It really does.

Yeah, I mean, like everyone, there was the collapse in 2008, 9, 10. It was then relatively flat for quite some time. And over the last year it started to grow and this year there's good growth across all the advertising sectors. And that of course is partly because the UK economy itself is returning to growth and clearly advertising tends to be slightly ahead of any economic recovery. Most brands, most companies having cut costs are now under pressure to grow their top line and to grow their revenues. The quickest way to do that is to get behind their existing brands and to advertise and promote them more. So, we're having a good time of that as the industry is. And television advertising is still remarkably cost effective compared to other media and it still has an absolutely unrivaled ability to reach mass audiences. And for us at ITV, if you look at our unique ability to deliver those mass audiences, we are responsible for 100% of all the commercial programs with an audience of more than 7 million, 98% of all the programs with an audience of more than 5 million, and 92% with an audience of more than 3 million. So, that ability to reach mass audiences very quickly is really our sell to advertisers and that's what we really focus on in terms of building our schedule.

Yeah, I mean, every time I see an article in the newspaper on the way home that says, for anyone out there still watching normal TV or for anyone still advertising on these... the truth is television is without any shadow of a doubt the most powerful media in the world. And 30-second advertising is still the best way of reaching a mass audience. Internet companies and the like would love to have what we have. That's why they talk about targeting, because they can't actually do the other things. They don't have that reach and that ability to do it very, very quickly. And that's why we have to keep investing in the product and the creative work and the programs to make sure that we keep driving those audiences. So, 30-second ads are still vitally important, but equally, like all companies, we're really starting to build out from that and we have to become ever more creative in helping all the advertisers stand out from the crowd. And whether that's people being able to Shazam the ads that they're watching on screen, whether it's using second devices and apps as we do on X Factor or Britain's Got Talent, all of those things are just allowing people to either engage with the television product or engage with the advertiser in many, many different ways now. And I think you're going to increasingly have to do that. And increasingly broadcasters will use all the data that we're now collecting on the people using our product online. So, although there's a lot of talk about that, it's not really started yet. But I think in 5 years time, all of that data will be incredibly valuable.

We definitely had a not so good moment in the first few months of this year. I mean, they are cyclical. Of course, it depends on the time of year. We traditionally don't invest much money in the summer because advertising goes down in the summer. But look, over the 5 years, we managed to stabilize it after a long period of decline. It's gone up a bit, down a bit each year. And for us, that isn't what matters most importantly. It's that ability to deliver these huge audiences time and time again, and that's what we focus on. But equally, if I look at the performance this year, it has been improving over the last couple of months, which is good. And it's a great reminder that where we lost out earlier in the year, actually wasn't on the big glamorous stuff like drama and scripted work. Actually, it was because the daytime shows weren't performing as they should have done. Our returning soaps weren't performing quite as they should have done. Some of the sport had let us down a bit, and factual and factual entertainment was particularly a bit light. So, we've really concentrated on fixing those, and over the last few months, daytime has been consistently up. Soaps have returned to form, and they're growing. And we've got the Rugby World Cup on at the moment, and a really strong schedule with Downton Abbey, Jekyll and Hyde due to launch. So, we're in really good shape for the autumn, and we'll have a nice flow into next year with Six Nations Rugby, all the Seth Rogen properties, Family Guy, American Dad, and the launch of Beowulf, and a number of other big dramas. So, I think we're turning the corner, and we're back into better shape now.

I think in this world, Sophie touched on it briefly. It's not just the programs themselves that bring large audience. I don't believe channel brands are by any means dead. I think they're incredibly important. And the way we segment it is our main channel is sort of for everybody. ITV2 is for 16-34-year-olds, ITV3 for 25-54-year-olds, ITV4 is for men, and ITVBe is for young females. And we have advertisers who all want to reach different audiences, and our job is to provide a mix of those audiences so that we can take as big a share of advertising as possible. So, we do that through targeted channels and targeted programs.

It's becoming one of the most important things in this new very crowded and very fragmented marketplace. Again, there's no one simple answer to it. It helps to have hugely popular program brands. And what we try to do is we term it being at the heart of popular culture. And actually, to be very good and very popular at the same time is the toughest thing I can imagine to do. And shows like Britain's Got Talent, X Factor, I'm a Celebrity Get Me Out of Here, Broadchurch on the drama side, Downton Abbey, they're all great examples of water cooler moments. Everyone wants to watch them, and everyone wants to talk about them the next day. So, that's the first step. The second step is to have strong channel brands, which is important. I think also to really use social media incredibly strongly. In the UK, something like 60% to 70% of all social media traffic at the weekend is about television programs. So, it's a real driver of viewing. And I think as well, you have to be prepared to try different things online. A couple of examples. One is we switched all our mobile ITV Player apps last year so that when you go on now, you land on live TV. And live TV already accounts for about 30% of our online viewing. And what that reminds you is that younger people don't see their phone or their tablet as a second device. They just see it as a TV screen. Right. And it's important to view it that way. And we certainly do. We just view a screen as a screen. Doesn't matter whether it's a television set or a phone or anything else. And then I think to experiment how you get content to people. One of the things about working in different industries is you learn that the consumer, or in our case the viewer, will always find the most convenient way for them to access what you do and the cheapest way for them to do that. So, you can't fight it. And so, one of the things we've been trialing is previewing content online, making whole series available online. If you've watched the first episode, get the second episode now online. And the really interesting thing is it doesn't seem to negatively impact your share of viewing on the linear channels. Actually, if anything, it helps improve it because it creates word-of-mouth and people talking about the program itself. So, I think increasingly all broadcasters will look to try different things like that and learn how best in different genres to get those things to work for them.

Yeah, well, I don't meet anyone who could with any certainty say they know exactly what's going to happen and I certainly don't. But what I can say is there's no doubt television, like every industry, has its challenges, but I would just remind people I think we start from an incredibly strong position. Television is an incredibly powerful medium. People love to watch TV. I actually think television viewing is vastly under measured because of the problems at the moment, although it will be fixed of measuring across all these different platforms. Right at its heart though is great original content. And I think as long as television companies invest heavily in great new original content, it will be successful. And the way that people consume that may change over time, but I don't think that desire for great content will ever go away. And that's why it doesn't matter whether you started life as a telephony company, a broadband company, an internet company, a media company, the key differentiator in the future, whatever your set of pipes is, will be what you have on those pipes. In other words, content. So, I think everyone that works in the content industry is frankly in a great position and you'll stand or fall by the quality of the work that you do.

I think we've got to keep investing in the company, keep doing more great programs, keep investing in the creative talent that we have. We're lucky enough to have all over the world great creative leaders, people like John de Mol, Brent Montgomery in America, Kevin Lygo across everything, Maria on the distribution side. It is very much as Sophie said earlier, it's a people business, it's a talent business. You've got to keep investing in that talent. And keep creating the environment in which these people can do brilliant work. And we started this 5 years ago and I feel it's only now that we're starting to see a lot of that great work come through into the market. And I'm really excited not just about the stuff that we're launching this week, but about what's to come after that because I can see the pipeline that we have ahead of us. And I think the picture looks extremely rosy.

Yeah, I think we've said very clearly and openly that we would do. Our shareholders are totally supportive of that. I think if the right companies are there with the right talent and the right idea about how we can help them in the future, then we'll always look at good acquisition opportunities. But the focus is always on growing what we have at the same time. And we try to do both things in tandem.

Thank you.

Thank you.