Anxious breakfast times ahead for TV-am's successor

BRUCE GYNGELL, the chairman of TV-am, is a man accustomed to receiving rueful letters. When TV-am was outbid for its franchise last year, Margaret Thatcher, architect of the system, wrote to her favourite television executive describing her shock.

Yesterday, as he prepared for this morning's final broadcast, which will be followed by a private wake for the 100 staff who remain out of 368, Mr Gyngell, with a note of bitterness in his voice, read from a letter written by David Glencross, chief executive of the Independent Television Commission, the regulator who helped deliver the executioner's blow.

The letter thanked him for 'showing that breakfast television does work in this country'. Mr Glencross added: 'Your successor will have to work very hard to keep the loyalty of viewers you have served so well.'

After its disastrous start in 1983 Mr Gyngell had, by 1986, turned the company into a goldmine: for 1992 he predicts record advertising revenue of pounds 86m.

Mr Gyngell, who is 63, is severing all links with British television, returning to Australia in the new year to become chairman of Channel 9. His offer to help sort out HTV, the financially- stretched Bristol and Welsh company, with TV-am cash and management expertise, was rejected.

TV-am has devoted energy to finding jobs for its staff; 300 have other employment. It set up a special office to monitor job adverts, ensured that each person's curriculum vitae was professionally presented and carried out training sessions before interviews.

A number of TV-am's screen personalities are switching to its South Bank successor, GMTV. These include the health expert Vernon Jones, and presenter Lorraine Kelly, who fronts its magazine section Top of the Morning. Mike Morris, its anchorman, however, has no slot.

There are clear signs of anxiety and first night nerves at GMTV (owned by Carlton, LWT, The Guardian & Manchester Evening News and Disney), which is saddled both with a high bid and requirement to pay a fixed 15 per cent of its revenue to the Treasury. After franchise changeovers, audiences traditionally fall away while the critics savage the newcomers' output.

More seriously, the ITV breakfast audience is under attack from Channel 4's wacky Big Breakfast: in the week before Christmas (ending 20 December)when the school holidays began, its audiences soared above 1 million for the first time since its September launch, while TV-am slipped below 2 million, at 1.9 million.

The GMTV programming director Lis Howell accepts loyal breakfast viewers may be irritated by the changeover and is trying to soften the blow: the famous TV- am sofas have been complemented by sets which look as if they were purchased from Ikea.

Predictions by the stockbrokers James Capel and Smith New Court are that GMTV, which is taking the franchise from TV-am, will lose pounds 4m to pounds 5m in its first year of operation, writes Jason Nisse.

Meanwhile Zenith, the media buying group owned by Saatchi & Saatchi, predicts that GMTV's advertising revenue in 1993 will be just pounds 60m, pounds 20m less than had been hoped for when the franchise application was put in. Out of this GMTV has to pay the Government its franchise fee of pounds 36m plus pounds 9m to cover the statutory charge set down by the Independent Television Commission. Running costs in GMTV's first year are estimated to be about pounds 35m, leaving the company with a projected loss of pounds 20m.

Christopher Stoddard, GMTV's chief executive, dismisses Zenith's forecasts as lacking hard evidence. He said: 'We have firm bookings for more than pounds 50m of sales and will exceed our predictions.'

He says start-up costs are 15 per cent below GMTV's budget. 'We are hoping to at least break even in 1993.'

GMTV faces perhaps the most difficult of all markets for revenue. But all the franchise winners face the problem that the economic conditions they are facing are much worse than they had predicted when they made their franchise bids in May 1991. Then, advertising revenue had fallen for the first time in nearly 20 years. No one in ITV thought it would fall further, but in real terms 1992 has been worse than 1991.

All the ITV companies predicted real growth - when inflation is taken into account - in advertising expenditure during the 1990s.

According to Zenith's predictions, ITV's advertising revenue will shrink in every year up until 2000 and in constant 1991 prices, advertising sales in 2000 will be at least pounds 100m less than last year.