Proactive Investors - ITV’s CEO Carolyn McCall may not be under threat yet, but as problems continue to crop up her position may soon become untenable.
McCall has been in the hot seat at the broadcaster since 2018 and is on a rolling contract with a 12-month notice period.
During her five years in charge, she has been tasked with growing the group’s streaming platform, ITVX, and guiding the company through a pandemic.
Now, she is putting out another fire. The Philip Schofield scandal, for which the 61-one-year-old boss has been summoned into Parliament this Wednesday, 14 June, is dominating the headlines and may spell the end for many at ITV (LON:ITV), including McCall.
Of course, it isn't just the Schofield scandal that would put McCall out of a job, or into early retirement.
While no one doubts she has been dealt a tough hand, the share price has more than halved during her tenure to 71.3p, which won't please the board or shareholders.
ITVX’s challenges
ITV rolled out ITVX, its streaming platform, in December last year.
Alongside exclusive shows such as Nolly and Murder in the Family, viewers can also stream re-runs of TV favourites such as Love Island.
Customers can also pay £5.99 for a premium service, an add-on to stream classics such as Doctor Who and Only Fools and Horses.
First-quarter results suggest that the free-to-air platform did okay, with a 49% increase in streaming hours and a 29% growth in digital revenue.
However, competition in the sector is fiercely strong and dominated by established players such as Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN).
While its free-to-air service certainly benefits consumers in times of economic downturn, questions will be asked once the outlook is rosier, and customers return to the pricier paid-for streamers.
“It must also navigate the threat of a cyclical downturn on advertising, especially if the UK economy softens further,” said Russ Mould, investment director at AJ Bell.
Advertising still accounts for nearly half of the group’s total income, and the fallout from the Schofield drama could cause irreversible damage to its reputation that may result in some companies and agencies pulling campaigns from ITV.
Mould notes the advertising situation could become further exacerbated in 2025, as he believes Ant and Dec are considering a break from “big money-spinner” Saturday Night Takeaway.
Who could replace her?
Should McCall be found to have in some way, shape or form been aware of Schofield’s actions, her role will increasingly become untenable.
Roddy Davidson, an analyst at Shore Capital, said any incoming boss would need to continue the current strategy of accelerating digital revenue growth.
One name that is being touted in some corners of The City is Sharon White, chair of the John Lewis Partnership.
White, who previously held the position of CEO at Ofcom, has been tipped by The City to be in contention for the role of chair at the BBC when Richard Sharp steps down at the end of this month, although the ITV job could also sway her.
Barratt Developments (LON:BDEV) confirmed last month that White will be stepping down from its board at the end of June, perhaps a sign she is getting her affairs in order before a change in job.
Of course, replacing McCall with White is certainly a risky move and one that might not please everyone, given that she isn't the most popular person at John Lewis Partnership.
In May, she was left bruised but not defeated following a de-facto vote of her leadership credentials.
Employees, also known as partners, held two non-binding votes on White’s decisions over the past year, and the confidence of her leadership moving forward.
The 61 partners that form the partnership council voted in favour of the direction of the company but were not too pleased with the choices made over the last 12 months.
White won't be the only candidate should McCall need replacing, and ITV will likely look both externally and within.
One external hire could be Jay Hunt, who has been executive director at AppleTV for the last six years.
Her experience in the digital world could be key in driving ITV's digitisation.
From within, there are a few candidates who stick out.
Firstly, chief operating officer Chris Kennedy, who has been with ITV for over four years, and played a key part in "ensuring ITV's transformation into a successful digitally led media and entertainment company," according to its website.
Julian Bellamy, managing director of ITV Studios is another option, with his role largely involved with overseeing the creation, production and selling of content both domestically and overseas.
Finally, Rufus Radcliffe, managing director of streaming, interactive and data has been with the company for over a decade and is responsible for On Demand, one of two divisions driving Media and Entertainment, which focuses on digital product development.
McCall, for now, seems safe. But if she is found to have swept Schofield’s antics under the carpet when she speaks to Parliament, then ITV may become the next broadcaster looking for a new boss.