While popular with viewers a number of factors during 1955 and 1956 placed ITV in a dubious position financially. Born to a Conservative government, Labour had vowed – if winning the next election – that ITV would be killed-off. This set an uncertain future for any investor. John Spencer Wills, of Rediffusion, stated it gave the companies only a ‘limited security of tenure’. The fact advertising revenue was far less than expected caused the collapse of ITV daytime programming which wouldn’t be, apart from some trial experiments in the late 1970s, resumed until the 1980s.
With profits far less than estimated the annual payment to the ITA regulator – payment for the licence to broadcast - suddenly seemed rather steep, and bosses of the commercial companies also suggested that airing ‘low rating minority’ programmes as the Independent Television Authority required were damaging potential income. The regulator noted that the money problems were having negative effects throughout the departments at the ITV companies. Sales departments were over worked trying to find willing advertisers while the production arms were being left frustrated with cut-backs and lack of funds.
It was estimated that Associated Television would lose up to £1,500,000 in its first year on-air. The main problem was laid at an advertising recession, which had taken hold in December of 1955. The Independent Television Authority, concerned that independent television could fall off the air due to the companies going broke, cut the cost of the annual payment to the ITA by one-third.
Some of the shareholders in Associated Television's parent company - ITC - decided to cut their losses and sell their shares. Lew Grade [Pictured, above, right] had invested £10,000 of his own money into the television business and had warned his wife Kathy that should ATV fail they would be broke. At the start Lew had split his time between the family talent agency, The Grade Organisation, and ATV. However by the end of 1955 he switched to the television company full time in order to try and save what was fast becoming a sinking ship. At the worst point of November 1955 ATV was losing £70,000 a week.
From April 1955 to April 1956 ATV had made a loss of £600,000. A cost cutting exercise saw the Alpha Studios production budgets slashed and senior management doubled up into other roles in order to save hiring new staff. It was all or nothing for Lew. He mortgaged his house and borrowed a further £5,000 to save the broadcaster. Lew became a major shareholder in the company, and arguably, the man who had the vision to stick with it and save ITV as a whole. He persuaded one of the remaining shareholders in Associated Television - the Daily Mirror - to give a cash boost of £400,000 to the network. It's this investment which Lew recalled saved the whole company from going into liquidation.
The company may have survived but it still needed to draw in advertisers who just didn't believe they were getting value for money; finally the doom lifted when figures for television set sales were released showing a huge increase in sets able to receive independent television had been sold.
With the news that an inital reach of 190,000 TV sets had rocketed to over 2 million the elusive advertisers returned to commercial television in their droves.
As quick as the advertising recession arrived, it left. Within ATV's second year it had made a profit of over £3 million which more than recouped the original losses.
The increase in revenue, and more so profits, lead to the now famous comment by Roy Thomson, of Scottish Television, that owning an ITV company was ‘just like having a licence to print your own money.’ TV Critic Peter Black described ITV of that time as 'the most lucrative private enterprise in Britain since the building of the railways.'
For his faith in independent television and ATV Lew Grade's original investment into the company had gone from being worth £2,500 in 1955 to being worth £600,000 by 1957. Lew would remain major shareholder of the company until 1981.