History of Regional Television in the South West


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Death of Sales Team

5 - Death of a Sales Team

George Russell’s bid reviewing team had originally been given a virtually thankless task. This was made somewhat easier by Russell’s individual participation during the Bill's creation, and the more conciliatory nature of new Heritage Minister, David Mellor. After many attempts, Russell had now got a system with which he felt he could work. He had purposely heightened the quality threshold by comparing it to Beechers Brook, the notoriously difficult fence in the Grand National. In doing so, he had changed the emphasis away from the predominantly money based approach in the original White Paper. This was not an easy task considering Thatcher’s domineering free market principles.

The process which Russell derived to scrutinise the bids was long and laborious, but ensured the least possible chance of being legally challenged after the awards were announced.

Every participant of the eleven-member team, except Russell himself, was responsible for up to two franchise areas. Russell felt that, as chairman, he should only provide an overall guidance at the quality stage, and so was responsible for none. No bids had even been viewed during this process, to avoid the temptation of comparing quality with bids. All the applicants had to do at this stage was to prove that they could meet the ITC’s programming commitments. Applicants were not ranked, just divided into passed and failed applications. Those that succeeded then went on to the next round.

The major disagreement concerned financial optimism. Five companies - TVNI, TSW, TVS, Tyne-Tees and Yorkshire - had all bid vast amounts to secure their franchise. Russell’s problem was to ensure that each company could sustain its service, including payment of that bid, throughout the ten-year contract. The ITC decided that TSW’s and TVS's bids were consistently riskier than the remaining three, and should be rejected. TSW's application was in most ways the worst of all. Its financial bid was nearly as much as the company’s balance-sheet value. TVS’s loss making US arm, MTM, threw a different light on the comparisons, however. TVNI's application was just the wrong side of borderline, while it was felt that both Yorkshire and Tyne-Tees would be able to survive its licence period.

Harry Turner was relaxing in a ridiculously expensive hotel in St Paul de Vance, a short distance away from Cannes. He was there for the annual MIPCOM programme sale conference. With just a week to go before the final verdict of the ITC, he did not feel too worried. He ruminated that the franchise was as good as his. His company had bid the most, assuming the tabloids were right, and had obviously passed the quality test.

The phone broke into his thoughts. Jane Thynne, media correspondent for the Daily Telegraph was on the other end. Turner was used to getting calls from journalists wanting a quick humorous quotation with which to finish an article. What Thynne had to say, however, did not leave Turner smiling.

“The ITC think you have bid too much.” Turner wanted to know the source of her information. “That’s the talk among journalists”, she replied. For once, a witty response did not seem appropriate. Turner just returned a feisty 'no comment'.

It could just be rumour, he considered. It might even be a warped practical joke. He had certainly played enough on his colleagues. The problem was that the idea must have come from somewhere. He had not considered the prospect that he might have overbid before. The way he saw it, TSW had had no choice. The Broadcasting Act was looking for ways to swell the Government’s bank balance. Turner was just playing the game.

He decided to ring Ray Snoddy. Snoddy had been having a grand old time out of the franchise auction. He had taken it upon himself to try and guess the size of each company’s bid. Having correctly ascertained TSW’s offer, it was certain that would know the feeling among the media analysts.

The Irishman listened as Turner related the contents of Thynne's call to him. Turner waited for a convincing denial. A sympathetic voice filtered though. Snoddy was not rejecting Thynne’s comments. ‘It does seem to be the general talk among the journalists’, he admitted. ‘I wouldn’t worry about it though. We think they’ll let you slip through. You’re small fry, Harry.’ It was confirmed. If there was ever a reliable ear to the ground, it was Snoddy. It dawned on Harry that there was nothing anyone could do. Turner prepared to spend a restless night in Cannes.

For twenty-four aspiring television companies, Wednesday 16 October 1991 was the day on which their dreams might be realised. For thirteen of the sixteen incumbents, it was judgement day. Only Grampian, Central and Scottish Television could rest easy. They had already won their licence by default. The latter two had won by bidding just two thousand pounds and relying on the probability that they would not be opposed. For Central, this was a major coup. Estimates put potential profits for the region at almost a quarter of a billion pounds. It was true that the bid itself was not the only outlay that the company had to pay to the government. A levy of eleven per cent of its ‘qualifying revenue’ had to go to the treasury. Still, compared to even Granada’s nine million pound steal, it had had the luck of the devil.

George Russell’s team had worked frantically to resolve the future of ITV at the earliest opportunity. This would give any new licensees fourteen months to prepare for the new term which was to begin on 1 January 1993. Russell had briefed the franchise participants 3 days earlier to expect the verdict by fax at 10.00am on the Wednesday morning. Forty sets of energetic eyes trained themselves onto a waiting fax machine.

Russell's problems had not yet ended. He had forty faxes to push out, and only twenty-four fax machines. It was decided to let the sixteen winners know of their good fortune first, with the losers being notified immediately afterwards. At 9.40 am precisely, the first batch was sent off, a good 20 minutes before the official time. This caught many of the applicants by surprise. Many believed the faxes to be sick jokes, devised by their managing directors to relieve the tension.

The final bids turned out to be less than surprising. The Financial Times’ media correspondent then was Raymond Snoddy. Snoddy was an Irishman, well respected in media circles, who had an extraordinarily good eye for a burning story. He decided that he would try to find out all the bids before they were officially revealed in October. Despite a determined attempt by the ITC to deter him, he succeeded in correctly reporting most of the forty bids. TSW's bid was among the easiest to discover. One of the directors on the board rang him up and told him the figure.

Dejected losers and exultant winners alike joined Kirsty Wark, that evening, for a special edition of The Late Show. It was an uneasy grouping. The forty-five minute format of the programme, during which time twenty guests had to speak, did not serve the debate well. No-one had the chance to fully express their point of view. Many, however, tried it. Harry Turner, rarely short of a sound-bite, had come to the conclusion that even “Mad King Ludwig of Bavaria would not have created a more lunatic system.” The most angry person in the studio was Professor Alan Peacock, on whose free market ideas the franchise auction was based. He was particularly infuriated that TSW had lost, as he had advised the company on their bid. He retorted that he had argued for the money raised from the bids should be re-invested in public service broadcasting. TSW and TVS should have won their licence back, he maintained, as they had both passed the quality threshold and had made the highest bid in their region.

In the end, the franchise auction seemed to please no-one except Michael Green’s Carlton which, at last, had gained the London Weekday licence that it had tried to capture in 1986. Up to a hundred million pounds had been taken out of programming budgets by the auction, in order to feed the exchequer. The government had only gained a fraction of the amount that a totally free auction would have raised. Viewers had new alien services forced upon them. Advertisers were wary of large campaigns while the station was still settling down into its new system. Yet, although all of these were reasons to criticise the process, only Margaret Thatcher’s stunning apology to Bruce Gyngell showed how deep a failure the system was.

Gyngell’s TVAM was the shortest lived of all the franchise round losers. From a disastrous genesis, the company had metamorphosed into the most profitable in the network. This was Thatcher’s idea of a model television station. Gyngell's principles were much the same as her own. He had shut out and sacked all of his engineers when they decided to go on strike, running a makeshift service which was more popular than its regular schedule. That TVAM lost, therefore, was a bitter blow to Thatcher’s plan.

Gyngell was astounded by the note that had been hand-delivered to him on the night after the results were announced. As he scanned down the note, he realised that he had in his hand a sincere apology from the architect of his company’s downfall. “I am only too painfully aware that I was responsible for the legislation”, Thatcher wrote. She added that, after seeing how some of the other licences were awarded, she was “mystified that you [Gyngell] did not receive yours and heart-broken”.

The Australian read the note out to the unsuspecting reporters during his speech at TVAM's annual broadcast journalist awards the following day. The reporters were ecstatic. Here was the former prime minister sincerely apologising for her policy. Her sentiments were echoed by the new Prime Minister, John Major. In a comment as impassioned as usual, he stated that he did not “think it has been an optimum success.” Opposition politicians made good capital out of her sentiments. Harry Turner waited with “trembling anticipation” for his personal apology. Unsurprisingly, it never arrived.

Gyngell never reproached himself for bidding so low. After all it had worked for Central and Granada. £14 million was all he believed the station could sustain without severe cuts in the quality of the service. Having sweated blood to recreate TV-am in the mid eighties, this was something that he was not prepared to do. Bitterly, he openly predicted that GMTV, the breakfast winner, would be bankrupt by 1994. Gyngell was not far out. GMTV made no profit at all during its first licence period. This was a disaster compared with TV-am’s status as the most profitable ITV company. By 1998, GMTV was paying around £50 million a year to the treasury. Its second ten-year licence, granted by the ITC in the same year, cut the company’s payments to only £20 million. By all accounts, save for the ITC’s, Bruce Gyngell had been vindicated. This figure was almost exactly the value that TV-am had bid in 1991.

The auction left many participants furious and bewildered with the outcome. Anomalies became apparent to all but the least cynical. Phil Redmond, whose North West Television failed to remove Granada, could not understand how his partners, Yorkshire and Tyne-Tees Television, managed to pass the quality threshold in their existing regions, but not as part of his conglomerate. Had the ITC preserved Granada purely to prevent the network’s top rated programme, Coronation Street, from being lost to a rival broadcaster? There was no way for Redmond to unearth the answer. A franchise loser could only find out how he failed if the ITC rejected him using the “exceptional circumstances” clause of the bill. This was thought to be one reason why the ITC avoided using the option.

As the biggest and most established loser, Thames Television had the best chance of surviving without its franchise. Indeed, Thames’ bid had been made on the premise that its worth outside of ITV was not significantly different to its value as a franchise holder. The loss still hurt, and its pride as a broadcaster had been dented.

Turner was more concerned at the ITC’s rejection of his ten-year business plan. He maintained that TSW's bid should have won. It had passed the quality threshold, and bid by far the most for the licence. Ironically,TSW had lost solely due to Turner’s faith in the government’s handling of the economy. Bitterly, he retorted, “Three hundred staff at TSW are asking what we did wrong. We played by the rules and the goal-posts were moved. I’ve sold airtime for twenty-eight years, and I’ve been second-guessed by a bunch of amateurs.”

George Russell asserted that “it is in their [TSW's] interest to keep their standards up, because in doing so they will get commissions immediately afterwards to keep going in whichever way they want”. This did not give Turner cause for optimism. TSW was just too small to survive without its licence. Standards inevitably dropped. “Costs will be pared to the bone”, he regretted as he prepared to reduce the amount of regional programming made by the company to the 7.5 hours weekly minimum.

Turner and TSW’s board realised that they had nothing to lose. All three of the other companies could either rely on independent production or on their back-catalogues. TSW found itself with virtually no marketable current or past programming in an area that did not offer enough independent productions to keep the company afloat. Turner met with the board after an abortive meeting with the ITC, and decided that the only thing that they could possibly do was to appeal.

The Broadcasting Bill made it clear that a company would only be allowed to appeal under extremely specific circumstances. The complainee had to have reason to doubt either the evidence that the commission used to reject the bid, or that the commission had applied the Broadcasting Bill’s criteria incorrectly. In its application for judicial review made on 7 November 1991, TSW took on the ITC in both of these areas.

Firstly, it complained that the criteria that the ITC used to evaluate the companies bid did not match the invitation to apply. TSW argued that the ITC was much more stringent that the original invitation implied and that it had no legitimate expectation that this would be the case.

The second arm of its case was that the ITC paper prepared by Sheila Cassels, which the commission used to make its assessment of TSW, was flawed. In particular, the paper criticised the predicted advertising growth rate - an estimation of which had to be supplied as an integral part of the application - used by the company. Whereas most other companies used a figure of around four per cent, TSW used 5.3 per cent. Cassels argued that if the more pessimistic figure proved to be correct, TSW would be plunged into a situation of persistent borrowing. She considered that the loan of ten million pounds from Barclays might be reconsidered when the bank realised the effects of the details of the business plan. Finally, she wondered how the savings and increase in profitability on which the bid was hinged could be achieved while the same management was still in place.

The first barrier was to get leave to apply for a judicial review. The High Court was not co-operative and refused to grant TSW's request. The company successfully appealed, with the Master of the Rolls, Lord Donaldson, ordering the ITC to hand over vital evidence concerning its business plan. TSW had made history. This was the first time that the television regulator had been forced to reveal its reasons for failing an applicant.

Following TSW’s successful appeal, three other companies - TVS, TVNI and White Rose Television - attempted to do the same. TSW's action had opened the floodgates, but the pretenders were told that they had applied too late. All they could do was to wait and see if TSW's review was a success.

This was the outcome which George Russell had been dreading. Even the smoothest result would delay Westcountry Television from setting up their operation for several months. If TSW won their case against the ITC, many or all the licences may then be eligible for review, removing any hope that the new system would be in place for January 1993. The best that Russell could hope for, was for TSW to lose the case, and decide not to appeal.

After evidence lasting four and a half days, the three Judges of Appeal at the House of Lords delivered their verdict. They took barely ten minutes to find against TSW, effectively condemning the broadcaster to death. The lengthy review had ruled out any co-operation with Westcountry, with the new licensee seeking seventy thousand pounds from TSW for every week past the 1 January deadline that its service was delayed. This meant that its only hope of becoming an independent producer was to search for work outside its region. There was little chance of that in such an overcrowded market. TSW, like its predecessor, had destroyed itself.

Although officially TSW made its last broadcast at 11:59pm on 31 December 1992, its last programme, a celebration of its ten years serving the south-west, went out live at 6.00pm that evening. For the following hour, the area relived its last decade. The studio filled with most of the characters who had kept the region entertained. Roger Shaw, presenter turned director of the company took his place in the studio, but otherwise contributed little to the final show. Judi Spiers rejoined old sparring partners, Ian Stirling and David Rogers, now managing director of local radio station, Orchard FM. The show was hosted by Kenneth MacLeoud, who had hosted the westcountry’s evening news programme from the beginning of Westward. He was joined by another survivor from the South West’s original franchisee, Gus Honeybun. Gus’s current minders, presenters David “Fitz” Fitzgerald and Ruth Langsford, returned the rabbit to the ‘wild’ in a touching, and somewhat surreal, comedy sketch. To many, this moment was the true end of the company. Amid a growing flood of tears, Ken MacLeoud managed to keep some form of composure as he led the cast past and present into a pained, and seemingly infinite rendition of Auld Langs Ayne. The picture faded to show the studios at Derry’s Cross in darkness, except for the broadcaster's neon logo. Moments later, that too had disappeared.

Harry Turner had left TSW a few months before the final hour, along with all the other executive directors. One of the most popular, and respected members of commercial television had moved on to spend more time with his memoirs. He had been proved right that the company had no chance without its licence. In the Spring of the following year, UK Safety, an industrial footwear manufacturer, had orchestrated a reverse take-over of TSW, removing the last official remnants of the company.

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