ITV’s Adam Crozier Talks Transformation Strategy

CANNES: ITV Chief Executive Adam Crozier was interviewed by World Screen’s Anna Carugati on the stage of the Grand Auditorium at MIPCOM, where he shared his strategy for turning the company into a global content creation and distribution behemoth and discussed the strength of its U.K. broadcasting assets.

Crozier took on the chief executive role at ITV five years ago, at a time when “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,” he said. “At the same time, it had allowed its content arm, ITV Studios, to wither for five years. So most of the great creative talent had left, and it had long since stopped investing in great new creative work. Pretty much everyone I met suggested that the right thing to do was to get rid of the content arm and focus on being a U.K. broadcaster. But even then you could see just how important creating your own content was going to become. So we decided to put content at the heart of our strategy.”

The organization has transformed significantly since then—Crozier noted that 65 percent of the people who work for ITV today didn’t work there four years ago. “We focused on getting into shape, turning around our free-to-air broadcast business, growing new revenue streams in digital and pay and then building this international content business.”

The company’s value back then was about £1.5 billion to £1.7 billion; “today it’s worth about £10 billion to £11 billion.”

Carugati asked Crozier about the strategy for building a global content business. The “building blocks” to execute on that goal included “getting great creative leadership, so people like Kevin Lygo and Maria Kyriacou…. Bringing in lots of creative talent, sometimes hiring them, sometimes setting them up in new companies, sometimes acquiring those companies. Focusing on key genres—drama, entertainment and factual entertainment. Developing new ideas, working with writers. Taking advantage of being an integrated producer-broadcaster. Then grow into working for other broadcasters in the U.K., and then move into international. So we really built it piece by piece.”

Today, ITV is the biggest commercial broadcaster in the U.K., and the company is the third-biggest distributor in Europe, Crozier said. “Over half our revenues now come from outside of the U.K.”

Carugati asked Crozier about ITV’s acquisitions spree, which has included the purchases of Talpa, Mammoth Screen and Leftfield, among many others. Crozier says he sees acquisitions like those as “talent deals—it’s all about having the best creative talent working as part of ITV…. We run them all as labels, if you like, and try to give people the creative and entrepreneurial freedom to work. Over half our growth has actually come from organic efforts—producing more and more great programs on our own—the other half has come from M&A.”

The acquired companies all have several things in common, Crozier noted. “They all focus on one of the genres we thought was key—drama, entertainment or factual entertainment. They all had great creative people running them. They had a track record of success, a history of investing in grade-A work, a strong pipeline of ideas coming through. We felt we could work with them and add value to them and they would add value to us. And we structured all the deals such that if people succeed and they deliver really strong growth, then they do really well.”

The conversation then moved to ITV Studios’ positioning in the scripted programming landscape. “It’s hard to believe that five years ago we had no scripted TV teams in America, and in the U.K. we had three drama teams. Today we have around 15 labels working on producing some kind of scripted content.”

Mentioning the diversity of ITV Studios’ scripted output, including Lewis, Poldark, Aquarius and, launching this MIPCOM, Beowulf and Jekyll and Hyde, Crozier said, “I think we’re in really good shape. And as everyone here 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. Beowulf is a great example. It’s a brand that everyone has heard of, it’s a cut-through idea based on the original poem, it’s exactly the kind of thing that will be heavily in demand right across the world.”

Crozier was then asked by Carugati about the strategy for the U.S. “We felt we had to have a real scale and presence there…. We tried to build our presence by working with great people. We want to be in all genres. We’re very strong in non-scripted. We’re moving into scripted and having some success there. What’s helped us enormously is that because we wear both hats—we’re a broadcaster and a content company—we instinctively know what broadcasters are looking for and we can often work in partnership with them on projects. 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 genres. That’s been a huge advantage for us in the U.S. 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, in talent.”

Next up for conversation was the British ad market. “This year there’s good growth across all the advertising sectors. That’s partly because the U.K. economy is returning to growth. Most companies are now under pressure to grow their top line, to grow their revenues. The quickest way to do that is to get behind their existing brands and to advertise and promote them more. Television advertising is still remarkably cost effective compared to other media. And it still has an absolutely unrivaled ability to reach mass audiences. At ITV, [we have a] unique ability to deliver those mass audiences. We are responsible for 100 percent of all the commercial programs with an audience of more than 7 million; 98 percent of programs with an audience of more than 5 million; and 92 percent of programs with an audience of more than 3 million. So that ability to reach mass audiences very quickly is really our sell to advertisers.”

Carugati asked Crozier about the health of the traditional 30-second spot. “Thirty-second advertising is still the best way of reaching a mass audience.” Nevertheless, extending ad campaigns to digital is key, be it integration with Shazam, apps or other methods. “Those things are allowing people to engage with the television product or with the advertiser in many different ways now. 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.”

Crozier went on to talk about ITV’s ratings currently. “We definitely had a not-so-good moment in the first few months of this year. Ratings are cyclical. It depends on the time of year. Over the five years we managed to stabilize the long period of decline. What matters is the ability to deliver huge audiences time and time again, and that’s what we focus on. Equally, if I look at the performance this year, it has been improving over the last couple of months, which is good, and where we lost out earlier this year wasn’t on drama, 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 sports let us down, and factual and factual entertainment. We’ve concentrated on fixing those and over the last few months, daytime has been up, soaps have returned to form, and we’ve got the Rugby World Cup on at the moment. We’ve got a really strong schedule with Downton Abbey, Jekyll and Hyde due to launch. So we’re in really good shape for the autumn.”

Carugati then asked about the portfolio of ITV digital channels. “I don’t believe channel brands are by any means dead, I think they’re incredibly important. Our main channel is for everybody, ITV2 is for 16- to 34-year-olds, ITV3 for 25- to 54-year-olds, ITV4 is for men, ITVBe is for young females. We have advertisers who all want to reach different audiences. Our job is to provide a mix of those audiences so that we can take as big a share of that pie as possible. We do that through targeted channels and targeted programs.”

Given the proliferation of platforms, getting viewers to tune in is increasingly challenging. “It helps to have hugely popular program brands. We try to be at the heart of popular culture. To be very good and very popular is actually the toughest thing. Shows like Britain’s Got Talent, X Factor, I’m a Celebrity…Get Me Out of Here!, Broadchurch, Downton Abbey, they’re all great examples. [They have] water-cooler moments, everyone wants to watch them and talk about them the next day. That’s the first step. The second step is to have strong channel brands. Also, we use social media. In the U.K., something like 60 to 70 percent of all social media traffic at the weekend is about TV programs. It’s a real driver of viewing. And you have to be prepared to try different things online.”

One example, Crozier said, was switching the mobile ITV Player apps to land on live TV. “Live TV already accounts for about 30 percent of our online viewing. That reminds you that young people don’t see their phone or tablet as a second device, they just see it as a TV screen. It’s important to view it that way. We view a screen as a screen, it doesn’t matter if it’s a TV set or a phone or anything else.”

Crozier continued, “We’ve been trialing things like previewing content online, making whole series available online. If you watch the first episode, get the second episode now online. The really interesting thing is it doesn’t seem to negatively impact the share of viewing on the linear channels. If anything it helps because it creates word of mouth. Increasingly, all broadcasters will look to try different things like that and learn how best to get those things to work.”

Carugati asked Crozier about his view on the future of broadcasting. “I don’t think anyone with any certainty can say exactly what’s going to happen. What I can say is there’s no doubt that television, like every industry, has its challenges. I think we start from an incredibly strong position. Television is a powerful medium. I think television viewing is vastly under-measured, because the problems at the moment of measuring across all these different platforms will be fixed. Right at the heart is great original content and as long as television companies invest heavily in great new original content, it will be successful. The way people consume, that may change over time. But I don’t think our desire for great content will ever go away. The key differentiator in the future, whatever your set of pipes is, will be what you have in the pipes.”

On the future of ITV Studios, Crozier said, “We have to keep investing in the company, keep doing more great programs, keep investing in the creative talent we have. And keep creating an environment in which these people can do brilliant work. We started this five 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. I’m really excited, not just about the shows we’re launching this week, but about what’s to come after that. I can see the pipeline we have ahead of us and the picture looks extremely rosy.”

The session ended with Carugati asking Crozier about ITV’s plans for more acquisitions. “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 acquisition opportunities. But the focus is always on growing what we have at the same time. We try to do both things in tandem.”