New ITV boss faces break-up threat from rebel investors

ITV faces a break-up threat from rebel shareholders who want it to demerge its programme-making arm from its broadcasting business as part of an audacious bid to extract value for City investors. The rebels, which include American stakeholder Fidelity, have presented their proposals to new chairman Archie Norman and plan to push for an early meeting with Adam Crozier, who was named as ITV's new chief executive last week. ITV Productions has seen its share of network output fall over five years from about 65% to just over 40%. The broadcaster still owns Coronation Street and Emmerdale , but hit shows such as X Factor and Britain's Got Talent come from independent producers. Shareholders want ITV's new bosses to look at three options: a sale of the business for an estimated £700m to a rival such as Fox; a separate listing for ITV Productions on the stock market in which current ITV investors would hold shares; or a partial sale or flotation that would allow ITV broadcasting to retain a controlling stake. Norman and Crozier are expected to resist the idea of a sell-off and look instead at beefing up the operation by bringing in fresh creative talent lured, perhaps, by a new financial incentive scheme. The company knows that it must either revamp ITV Productions or spend more of its budget on the best independent shows. Norman's preference, though, is for ITV to create and own its own top programmes: only then can it hope to exploit international sales, merchandising and online and mobile distribution. But a City source said: "ITV is facing rampant competition, audience share has dwindled, so it should come as no surprise that investors are examining how the company could make itself more valuable." Shareholders contend that if ITV Productions were set free it would be able to widen its appeal and increase profitability by selling programmes to rivals such as Channel 4 and the BBC. Separately, Norman is trying to set up a creative coalition including Channel 4, Channel 5, content producers, performers and even BSkyB to lobby government to deregulate broadcast media.