ATV financial results: 1966
Lord Renwick on Associated Television Limited’s 1966 results
“Results no less than excellent”
The 11th Annual General Meeting will be held at ATV House, Great Cumberland Piece, London, W.1., on Thursday, 22rd September, 1966 at 12 noon.
Extracts from the Statement by the Chairman, Lord Renwick, K.B.E., can be found on this page.
Profits, tax and levy
The Consolidated Profit and Loss Account shows a profit for the Group, before Levy and taxation of £11,059,311 [£171m in today’s money allowing for inflation – Ed]. This represents an increase of £1,699,370 [£26.3m] over the results of the previous year (£9,359,941 [£144.7m]).
Moreover, this year’s trading has had to bear the full brunt of 12 months’ Levy on Television Advertising Revenue. Thus, the sum of £5,432,366 [£84m] had to be set aside for this purpose, as against the sum of £3,837,593 [£59.3m] for the 8 months of the year to the 4th April, 1965 — the year in which the Levy was introduced.
Taxation for the year amounts to £2,780,325 [£43m] as against last year’s figure of £2,752,639 [£42.6m]. In total, therefore. Levy and taxation have consumed no less than £8,212,691 [£127m] (74%) of the Group profit.
It should furthermore be noted that this figure of Levy and taxation payable to the Exchequer is in addition to the sum of £985,253 [£15.2m] payable to the Independent Television Authority for the rental of the London and Midlands Transmitters.
Nevertheless, the Group profit after Levy and taxation amounts to the final figure of £2,846,620 [£44m] as compared with £2,769,709 [£42.8m] for the previous year.
EFFECT OF GOVERNMENT POLICY
In June your Directors announced the intention of recommending a final dividend of 10%, making a total of 26% for the year. The year’s accounts were accordingly drawn up on this basis.
In view, however, of the Government White Paper, “Prices and Incomes Standstill”, I have to tell you that your Directors now feel bound to recommend that the final dividend should be 6½% and not 10%, thus leaving the total dividend at 22½%, as for the previous year.
EXPANSION
The Chairman of a Company which is expanding so rapidly as Associated Television naturally finds himself at a disadvantage in preparing a Report which must suffer some delay before it can reach the hands of the shareholders.
Accordingly, even though these developments have occurred after the end of the financial year under review, I feel that I should report several new acquisitions to your Group’s interests.
First, there is our joint undertaking with Chappell’s in music publishing through our acquisition of a 50% interest in two companies New World Music Limited and Jubilee Music Inc. Secondly, there is the 50% interest in a new publishing company to be formed jointly with the International Publishing Corporation to operate in the general field of educational and industrial training publications and in connection with television programmes.
Thirdly, we have now acquired the remaining 50% of Pye Records making the company a 100% subsidiary of ours.
In addition we have acquired the remaining 49% minority interest in J. Rosenthal (Toys) and are arranging for the acquisition of a 7½ % interest in an insurance company already established by IPC, Reeds Paper Group and Eagle Star.
THEATRES
In my last Report, I referred to your Company’s “largest and most important single investment” in the shape of the acquisition of the whole of the share capital of the Stoll Theatres Corporation and of Moss Empires.
I am now happy to be able to speak of the eminently satisfactory – indeed substantially improved – results of the Theatre Croup, under the Chairmanship of Mr. Prince Littler.
A new record was established for the London Palladium; and, throughout the West End, our theatres played to well-filled houses. Conspicuous among other successes has been Noël Coward’s repertoire of three plays at the Queen’s Theatre which played to capacity business, and “Hello, Dolly!” at Drury Lane.
It is nevertheless sad that the theatre industry, so recently relieved of the burden of Entertainment Tax, should now be saddled with rising costs deriving from the Selective Employment Tax.
ATV NETWORK
In my last year’s Statement I referred to your Company’s policy of “planned expansion”. As this expansion of activities extended into fields other than television, it became increasingly apparent to your Board that a completely new Company framework was required. Accordingly, steps were taken to reconstruct the Group in such a way that the parent Company would become purely the holding Company of its various trading subsidiaries – including a new subsidiary company to be entrusted with the Television Service operated under licence from the Independent Television Authority.
In April, 1966, this major move was completed. A subsidiary company, ATV Network, was created. It was to this new company that, with the agreement of the Independent Television Authority. the Programme Contract with the Authority and the ancillary television activities were transferred.
Transdiffusion analysis
As originally conceived, the Levy was to be a tax on the profits of all ITV companies. It was, fairly well at the last minute, converted into a tax on advertising turnover.
The first version would’ve been far worse for Associated Television Limited than for the other three members of the Big Four. Granada TV Network was a subsidiary of a cinemas and leisure chain. ABC was a subsidiary of a film making, distributing and exhibition company. Rediffusion was a subsidiary of BET, a giant industrial combine that did everything from buses to laundries to heavy plant hire. The key here is that those ITV companies are subsidiaries – little self-contained bubbles that can only be taxed on what they do as ITV companies.
ATV was organised the opposite way. The ITV company sat at the top of the tree, with everything else – theatres, toys, magazines, records, bowling alleys – being owned by it. But should someone suggest altering the Levy to a ‘fairer’ tax on profits – as ATV themselves have accidentally argued for repeatedly – the results would be devastating. The reformulated Levy would start taking cash from the tills at Ambassador Bowling alleys and Bermans & Nathans costumiers. The ludicrousness of this wouldn’t particularly matter to the proposer of such a change.
It mattered to ATV, who have turned the company on its head. Associated Television Limited is now an empty holding company, doing nothing but owning subsidiaries that do stuff. The ITV contractor is now ATV Network Ltd, one of those subsidiaries (and, coincidentally, this marks the point that ‘ATV’ on-air stopped meaning ‘Associated TeleVision’ and the initials no longer stood for anything). Any raid on ITV profits would not now take money from Stoll-Moss and Pye Records.
Something that is taking money away from the whole group, however, is the new Selective Employment Tax. Last year’s boom has faltered and export of physical commodities is seen as a way of reversing this. How do you make companies manufacture more? By subsidising them. How do you subsidise them when there’s no money in the kitty to do so? By getting more export dollars. The way out of this chicken/egg problem was to impose an additional tax on service industries – any company that does something rather than makes something – and redistribute that money to the manufacturers. Also, the people don’t want to work in factories any more, they would like nice office or creative jobs. You can’t tax people in service industry jobs more directly, not if you want to win any election ever, but you can make the employers less keen to hire people for those jobs.
S.E.T. was a flat tax on service industry employers. They had to pay 25s [£1.25 in decimal, about £19.35 in today’s money] per adult male employee per week. Reflecting the fact that these were sexist times and that it was adult men who were mostly wanted for the factories, the flat rate per week for women and ‘boys’ (men under 18) was 12s 6d [62½p, about £9.66] and for ‘girls’ a mere 8s [40p, about £6.18].
TV WORLD
The Midlands programme journal for Independent Television is published by Odhams Press Limited on behalf of ATV Network and ABC Television Limited. The success of the magazine has been unprecedented, and sales have risen steadily to well beyond the 700,000 mark.
MERCHANDISING
In none of your Company’s subsidiaries has expansion been more rapid or more satisfactory.
The publishing venture, in association with the News of the World Organisation of the two magazines “TV Century 21” and “Lady Penelope”, has proved eminently successful, and their combined circulation is over the million mark.
The new subsidiary company, J. Rosenthal (Toys), which markets products associated with television programmes is now equipped to become the major distributor in this field, and shows substantial profits.
COLOUR
Colour on the 405-line standard could be made immediately available to the entire British receiving public in the existing VHF services. Those viewers content to watch only black-and-white pictures would remain entirely unaffected. If 405-line Colour Television were authorised in the New Year, ATV Network alone could immediately contribute not less than 20 hours of Colour programmes a week to the Independent Network.
In order that this country should not lag behind in the development of Colour Television, we therefore advocate the earliest possible introduction by the ITA of colour on the 405-line standard in the existing VHF service. By this Autumn, ATV Network’s Studios in London and Elstree will be equipped for Colour operations in the various international line-systems.
EXPORTS
For the first time in television history, British series have been purchased simultaneously by all three American TV Networks. Columbia Broadcasting System purchased 45 episodes of “Secret Agent” (known to British viewers as “Danger Man”), the National Broadcasting Company purchased “The Saint”, and “The London Palladium Show”, and the American Broadcasting Company purchased “The Baron”, “Court Martial” (jointly produced with MCA), and “McGill”, a new series for next season. The triple jackpot of selling to all three networks has at last fallen into British hands.
I am glad, moreover, to be able to say that, for the Eastern Hemisphere, the sales curve of ITC continues to point sharply upwards. Indeed, for the first six months of the current calendar year total sales approximate to the whole of the previous 12 months’ turnover. These sales have been made in more than 50 different countries.
FILM-MAKING
Another intensive programme of film production is currently in hand, including “The Saint” and “McGill” together with a new Patrick McGoohan series “The Prisoner”.
PYE RECORDS
This is the first Annual Report in which I am able to refer to Pye Records as a wholly-owned subsidiary, even though the results contained within the Consolidated Profit and Loss Account reflect only the dividends received under the 50% ownership which then existed.
During the past year, Pye Records has maintained a leading position within the industry. Although in the United States the sudden vogue for British Pop records has somewhat declined, sales have remained good and the overseas sales of Pye Records in other markets have shown a steady improvement.
THE MIDLANDS
At no time in your Company’s history, has the operation of the weekday licence played so conspicuous a part in Midland affairs and the scope of local programming has notably increased.
The first successful five-day-a-week serial, “Crossroads”, originates in Birmingham, and has proved to be nationally popular.
Another Midlands ATV Network programme – this time designed for the young – “Tingha and Tucker” has, as a result of its overwhelming local popularity, now won itself a place in the national Sunday network.
MUZAK
It is all the more agreeable, bearing in mind the originally slow acceptance of this commercial and industrial amenity, to be able at last to refer to its established success. Growth has been rapid, and the daily Muzak audience in the British Isles now numbers some 2,000,000 persons.
BOWLING
In the year under review, the ten bowling centres, comprising 273 bowling lanes, produced satisfactory results showing an improvement over the previous year.
The effects of the Selective Employment Tax cannot do other than affect future profitability.
MANAGEMENT AND STAFF
The debt which your Company owes to the efforts of its Managing Director, Mr. Lew Grade, can in no way be exaggerated. His energy, flair and foresight are apparent in every phase of the Company’s operations and, once again, I most gladly take this opportunity, on your behalf, of thanking him.
I am glad, too, to place on record how fortunate I feel that the Company was to secure the services of Mr. Robin Gill as Deputy Managing Director. The top management team of Mr. Lew Grade and Mr Robin Gill has proved an inestimable asset in the Company’s manifold and expanding affairs.
No less do I and my co-Directors wish to thank all members of Staff throughout the Group. The present healthy and vigorous condition of the Company could never have been achieved without their loyal and devoted work.
About the author
As a public company with shareholders, ATV was required to publish a detailed Annual Report at the end of each financial year. It was common to also publish a Chairman's Statement, summing up the report in more readable language.
