18th Oct 2007 10:44
ITV PLC18 October 2007 18 October 2007 Grade outlines tough package of new measures to tackle PRS failures £7.8m reimbursement offered - any unclaimed funds donated to charity ITV Executive Chairman Michael Grade today published the Findings of theDeloitte Review and ITV Investigation into premium rate services (PRS) withinITV programmes and announced a tough package of new measures to address theissues raised. On March 5th 2007 ITV announced the immediate suspension of all PRS activity,following concerns raised over the use of PRS, and appointed Deloitte to carryout an independent review of PRS in ITV programming. The review was conducted in three phases: first, a review of PRS procedures inall current programming, ensuring that all relevant programmes currently on airhave benefited from the Deloitte process; second, identifying processes andcontrols that could be put in place to reduce the risk of failures arising inthe future; and third, an investigation to establish the nature and scale of anyincidents relating to the provision of PRS which have occurred in ITV programmesfrom 1 April 2005 to 31 March 2007. During this thorough and independent process Deloitte has considered informationrelating to PRS in ITV series and all relevant internal and external suppliershave been contacted. Out of more than 60 ITV series reviewed, serious editorial issues have beenidentified in three ITV programmes: Soapstar Superstar 2007; Ant and Dec'sSaturday Night Takeaway 2005 and 2006; and Ant and Dec's Gameshow Marathon 2005.As we announced on 21st September, The British Comedy Awards 2005 is the subjectof a separate investigation by media law firm Olswang. The Deloitte review also highlighted serious technical issues around the use ofred button for voting and the late arrival of SMS text votes on five occasionsaffecting two ITV shows, including the X Factor final 2005. On none of theseoccasions did the problems alter the actual outcome of those votes. The review identified key areas of failure in the way in which ITV integratedPRS into its programming: • Programme producers, staff and supporting companies did not always recognise or respect the impact of editorial actions on the integrity of interactive elements; • Lack of agreed and consistently applied procedures, controls and ways of working between the many parties involved in the process; and • Supporting technology, in the most part supplied by third party suppliers, lacking the reliability and resilience consistently to deliver the required level of service. Commenting on the review's findings, Michael Grade said: "Today marks a major milestone in our efforts to restore public trust and putour house in order after a series of events that have affected not just us, butthe entire broadcasting industry. "When allegations around premium rate services in ITV programmes first emergedin March, we took immediate action. We suspended all premium rate services andappointed Deloitte to come in and review our procedures and then to undertake athorough review of the previous two years' activity in this area. Since Marchany programme that uses PRS has had to implement and adhere to the newprocedures put in place as a result. This is working very well. "I knew when I commissioned this work that it might make for deeplyuncomfortable reading. But it has been a necessary and vital process. It isonly by understanding how things went wrong in the past, and being open aboutthem, that we can be sure that we get them right now and in the future. Thepurpose of the review wasn't limited to flushing out the problems and learningthe lessons. We have used it to assess viewers' losses, so that we canreimburse them. "We have today announced a comprehensive scheme to reimburse affected consumers. Any unclaimed amounts will be donated to charity. My overall conclusion fromthe review is that there was a serious cultural failure within ITV. Thefundamental failure was in not recognising the impact of PRS on existingeditorial processes. The Ayre report on PRS put this very succinctly, and Iquote: 'broadcasters often ignored the fact that viewers had entered in to anadditional transaction entitling them to an extra service they paid extra for'. "The Deloitte review shows that, like other broadcasters, ITV fell into thattrap. While the company saw interactivity as attractive to viewers, and PRSrevenues as valuable additional revenue, it missed the fact that with it cameobligations as well as opportunities. It was not understood that when theaudience is invited to make choices within programmes, the producer iseffectively ceding part of his/her sovereignty over editorial decisions. "These failings were not venal. In all cases individuals were motivated bytheir professional instinct to produce the best show, but they failed tounderstand that this could come at the expense of keeping faith withparticipating viewers. This cultural conflict was compounded by several otherfactors including: the speed of development of PRS activities; the complexity ofthe technological factors; the sheer volume of calls; and an extended chain ofoperational command that existing compliance procedures failed to keep up with. "As I have made clear on numerous occasions, the relationship of trust betweenthe broadcaster and the audience is paramount. That is why we immediatelystopped all interactive services when allegations about an ITV show firstemerged. That is why with the help of Deloitte we now have the processes inplace to identify and rectify this. "I am also on the record as saying that I take a zero tolerance stance, and thatmeans not tolerating a culture that condones audiences being deliberatelymisled, or not getting the service they have been offered. In some instancesthere has been disciplinary action, but I don't intend to take a couple of tokenscalps in expiation. That would not solve the problem. As I've said, thoseinvolved thought they were working to make the best programmes. The effectivesolution is to change the culture, to change the systems, to understand theimportance of trust. I am absolutely sure that there isn't a person working inor for the company who doesn't understand now where and why it went wrong. Andeveryone also knows that a line has been drawn, and that there will be noexcuses for ignoring it - the consequences will be severe. As I said to theSelect Committee earlier this year, now we have the processes in place it willbe a case of one strike and you're out. That's how we will rebuild trust. "Let me say finally, on behalf of ITV, that we deeply regret what has happenedand how sorry we are for breaking trust with our viewers." In response to the review, ITV today announced a comprehensive reimbursementscheme. Affected consumers will be offered reimbursement, with the right toclaim at any time before 29 February 2008 by contacting ITV on Freephone number0800 028 0180 or via www.ITV.com/competitions. The reimbursement process will beeasy to follow and will be well publicised on air by ITV. ITV recognises that some of this amount may not be reimbursed as it may not bepossible to identify or verify all affected individuals in every case; and somepotential claimants may not make a claim. To address this, the difference between the total potential reimbursement andthe actual amount claimed by consumers will be donated to charity. The totalpotential reimbursement is around £7.8 million, which represents the amountspent by affected consumers and is almost double the amount ITV actuallyreceived from these calls. In addition to reimbursements, ITV today announced a number of significantchanges to the operation of PRS within its programming and training processes. • The immediate suspension of all SMS and Red Button voting in live programmes. Only when the network and platform operators can reassure ITV that appropriate systems are in place to ensure delivery of votes in a timely fashion, will ITV reconsider this position. In the meantime, ITV will continue to offer SMS and Red Button for non-time critical competitions and other interactivity. • Bringing telephony service provision in-house on programmes made by ITV Productions, with an intention to extend that across all programmes broadcast on ITV. ITV is working with BT to develop a solution to manage interactive service provision in house. ITV's dependency on third party providers will be reduced and the level of control that ITV can exercise over services will significantly increase. • Introduction of relevant and targeted training across the company ensuring that employees are aware of their responsibilities in respect of the operation of interactive services and its integration into programme making. In addition all productions employees will receive broad compliance training on joining the company and will be required to attend refresher training on a regular basis. • ITV's compliance resources are being strengthened with the addition of a dedicated Interactive Governance team to ensure maintenance of industry leading standards and the probity of all interactive services across ITV. In addition to ITV's commitment to reimburse £7.8 million associated with PRSactivity, and to donate any balance of that sum to charity, ITV will also haveincurred costs in the process of approximately £2 million. In the results of ITVfor the half year to 30 June 2007, ITV had included, in pre-exceptionaloperating profit, a charge for items associated with PRS activity across ITV andGMTV then estimated at £5 million. Subsequently on 26 September 2007 Ofcomannounced a fine on GMTV of £2 million. Based on current estimates and beforeany potential Ofcom fine on ITV, an exceptional operating charge of £18 millionassociated with PRS activity will be taken by ITV in the full year 2007 and willinclude the £5 million pre-exceptional operating charge taken at the half year. Ends. For more information please contact: ITV Communications: Brigitte Trafford - 0844 881 8180Jim Godfrey - 0844 881 8434Ruth Settle - 0844 881 8225 Tulchan Communications: Tel: 0207 353 4200Andrew GrantSusannah VoyleDavid Allchurch ITV Investor Relations: James Tibbitts - 0844 881 5656Georgina Blackburn - 0844 881 5665 Notes: • Viewers wishing to claim a refund for any of the issues raised can obtain a claim form, from 1 November 2007, by contacting ITV on Freephone 0800 028 0180 or via the web site www.ITV.com/competitions • In March 2007, ITV appointed Deloitte & Touche LLP to carry out a comprehensive review of the use of premium rate interactive services ("PRS") in programming on all ITV channels. This work has been conducted in three phases: o In Phase 1, Deloitte reviewed procedures in relation to PRS in specificprogrammes which were being broadcast or about to be broadcast at the date ofthe announcement in order to strengthen procedures as necessary; o In Phase 2, Deloitte helped to identify processes and controls thatcould be put in place to reduce the risk of failures arising in the future; and o In Phase 3, Deloitte undertook an investigation to establish the natureand scale of any incidents relating to the provision of PRS which have occurredin ITV programmes over the last two years from 1 April 2005 to 31 March 2007 • The Findings of the Deloitte Review and ITV Investigation into use of PRS services in ITV Programming have been made available to OFCOM and ICSTIS and are available at www.itvplc.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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