COMMENT LISA BUCKINGHAM: Archie must show he has the X Factor

By LISA BUCKINGHAM
Updated:

Like generals, some businessmen's success owes as much to luck and timing as it does to naked talent. I suspect Archie Norman's arrival at ITV will prove the point.

He clearly already has a strong vision in the plan to turn the channels other than ITV1 into pay-TV. This may not be enough. He may need to develop a pay-TV platform, possibly based around SDN, which ITV owns and is the transmission system behind Freeview.

This is unlikely ever to rival what the company earns from advertising and premium-rate phone vote revenues, but one thing this recession has made clear is that Pay-TV has become one of life's staples --practically recession-proof. More of this would be helpful.

Archie Norman

Archie Norman in his role as former Conservative MP with William Hague

But Norman knows ITV must develop its own hit shows (it doesn't own the hugely successful X Factor, for example) and find new ways to motivate staff in the TV production operation (after all, Norman was the man who created the badge-wearing colleague culture in the early days of the Asda turnaround).

He has also to get rid of the embarrassing individuals laughingly described as a board and to put a chief executive in place.

The three executives who run ITV, Peter Fincham, director of television, Rupert Howell, director of ITV brand and commercial, and John Cresswell, the interim chief executive, are sending out mixed signals.

Fincham is thought more interested in the top job at Channel 4, although he may stay for ITV's broader canvas, while Cresswell had said he would quit as soon as decently possible, but now appears to be changing his mind.

Although Norman is described as a non-executive chairman, that is not what his pay package says --300,000 a year plus 400,000 shares (currently about 50p) for the next four years. That does not sound very non-executive to me.

And to start his journey with a fair wind, what had been expected to be a 20 per cent drop in advertising revenues this year has pulled back to 12 per cent.

And The X Factor audiences peaked last weekend at 16.5 million, which means £250,000 for every 30-second advertising slot.

AS the high tide of financial crisis ebbs, there is one lesson of absolute clarity. A failure of boardroom governance can cost billions.

What remains as hazy as ever though, is how we put that right.

Sir David Walker will this week publish his template for improving the governance of banks, but others are moving on to how investors - those the public trusts to do something about big corporate issues - can be given the incentive to make sure this brave new world actually works.

Lord Myners, the former fund manager turned City Minister, has grappled with ideas such as twotier voting to reward longer-term shareholders.

But last week, as we report on Page 52, he urged the investment industry to set up a new organisation to engage with companies and academic institutions to prove that good governance is value for money.

This is crucial. Investment firms simply will not go the extra mile to improve corporate performance unless there is something in it for them.

It is costly to engage with companies in anything other than a box-ticking way. And while rival fund managers ignore their stewardship role, no investment firm in its right mind will shoulder this extra cost.

The think-tank Tomorrow's Company have been looking at this and their report is also due this week.

It is likely to accept that some investors will run a mile rather than get involved in improving governance, others will do bits and bobs, while a leadership group will take the whole idea of stewardship to heart.

If fund managers were legally required to state which group they belonged to, a competitive difference could open up between the Rolls-Royces and the Trabants of the investment world.

It has been suggested that a small levy is applied to the cost of company listings and this could be given to the 'heavy lifters' to defray their additional costs.

As good stewardship is clearly a public benefit, the Government should also focus on offering some kind of tax break to the most active firms.

But, of course, that costs money. And having emptied its coffers and more to bail out the last failure of governance, there is precious little left to ensure no repeat.

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