For Broadcast February 04, 2010

Why 3D innovation could have Sky weighing a deal for ITV Studios.

I was at the Emirates Stadium watching Arsenal v Manchester United at the weekend, but I couldn’t stop thinking about the in-tray of Adam Crozier, the new chief executive of ITV.

I was at the game courtesy of Sky, which launched its first live broadcast in 3D, allowing us to watch Arsenal flop against Man U in full, agonising definition.

The head of Sky Sports, Barney Francis, who relaxed once the 3D coverage was well underway, admitted that broadcasting live in 3D was “fantastically expensive” but said that in three years the prices will fall and be equivalent to HD today.

In between ducking the 3D graphics when they popped out of the plasma screens (the Sky Sports logo looked like it was going to deck me at one stage), Francis reiterated something that anyone who follows Sky has heard before: “This is the next thing, and Sky is very progressive. We take the risks.”

In this case, 3D is the next thing and although I can’t really see the plastic glasses catching on, Sky is doing what it does best - pushing the envelope.

What Sky does so well is lay out a plan, and then follow it. According to Archie Norman, the newly installed chairman of ITV, that is exactly what ITV has not been good at. Announcing the appointment of Adam Crozier as ITV’s new chief executive, he said there was “not much to disagree with” in the content-led recovery plans set out by former boss Michael Grade three years ago, but admitted that “we haven’t delivered it”.

Given Crozier’s track record at both the FA and the Royal Mail, you would not be daft to think that cost-cutting is going to figure big in the ITV plan, but Norman demurs, saying that the priority is no longer cost reduction but “transformation” in ITV’s culture, organisation and business strategy.

And the top priority - according to Norman - is to lessen ITV’s dependence on free-to-air TV advertising and compete on all new media platforms, including, one expects, a long overdue re-look at pay TV.

Perhaps the biggest question mark will be over ITV Studios, which has seen its share of output on ITV drop from 65% to a little over 40% in five years.

ITV’s biggest shows, such as The X Factor and Benidorm, are now owned by outside producers.

Institutional shareholders are reportedly pushing for a full or partial public offering or sale of ITVS as a way to extract value from their ITV investment. Well, Sky has long had its eyes on ITVS and has a significant stake in the broadcaster (that it must sell, according to competition authorities) with which to open a conversation. And why not involve Elisabeth Murdoch’s indie Shine as a part-owner of ITVS as well, a nice way to keep it all in the family?

In the next few months don’t be surprised to see 3D glasses popping up at pubs sponsored by drinks brands such as Guinness, as Sky builds awareness around 3D. But the big question is whether some of the 3D programming over the next few years will be made by an ITVS that is part-owned by Sky.