THE conference room window of SMG's Pacific Quay headquarters provides a panoramic view of Glasgow's newest bridge, the so-called 'Squinty', which unites the banks of the Clyde in a diagonal arch.
Sadly, it is out of action due to a snapped cable and now looks like a building site, festooned with cranes and yellow-jacketed workmen hoping to fix it by late summer.
It was built at the behest of the BBC, which moved into its own new gaff next
door and has proved a popular short-cut into the city and the west end's wine bars. Rob Woodward, SMG's chief executive, has a personal reason to feel disgruntled that the bridge will be closed for six months. "My flat is just over there," he says, pointing directly across the river to one of the apartment blocks that now skirt long stretches of the water's edge.
A river that once buzzed with workmen clambering over ships is enjoying a second coming as a residential, cultural and media centre. It has also witnessed its fair share of problems, from the broken Science Centre tower to the current controversy over the bridge. SMG itself has not had its troubles to seek.
The company has undergone a chameleon-like existence, buying then shedding acquisitions in quick succession, and creating a multi-stranded strategy that left investors unclear as to its ultimate goal. The move two years ago from Renfield Street to the site of the former Garden Festival was supposed to mark a new beginning, but instead its management found itself under virtual siege from unhappy shareholders.
A rebellion led by Hanover, the activist investment group, saw the old regime ousted and a new board ushered in with a determined, if as yet unproven, plan: to return the business to its core role as a television company. It meant selling off the remaining businesses, not least to clear a debt that stood in the way of progress.
As he approaches the first anniversary of the coup that propelled him into the top job, Woodward believes the tide is turning in his favour as the problems get sorted and the strategic vision becomes clearer, though he admits that "no one ever said it would be easy". With the company's valuation falling through the floor, that looks like a truism, though the chief executive argues that the balance sheet has been restored and value will come back.
"The company in financial terms is in a much stronger position than it was," he says. "We had debts which the company could not afford and inherited a strategy which was flawed. So 2007 was about putting our house in order, reorganising our balance sheet, which we have done, reorganising our debt facility, which we have also done, and reorganising our television business which we have now virtually completed. It was also about starting the sale of non-core assets. Primesight (the outdoor advertising business] was sold and we are involved in a sale process around Virgin (the radio business]."
But offloading Virgin has not been easy. Despite the strength of its brand and the scarcity of good radio assets, it has proved stubbornly stuck in the SMG portfolio. As it was being prepared for market it lost its chief executive when Paul Jackson jumped ship to join his former boss Fru Hazlitt at GCap.
When Virgin is sold – it will fetch about £60-£70m from one of four bidders – SMG will pay down debt to a more a sustainable level, although this would have been achieved earlier if Virgin had been floated last autumn. Aborting the float and the initial sale plan, meant going back to the market with a £95m rights issue.
Woodward says that the issue was oversubscribed, and that a smaller rights issue would still have been required even if Virgin had been sold last year. But he has few answers to the subsequent collapse in SMG's share price. Since the new team moved in last year, the shares are down 74%, hardly a ringing endorsement for the strategy. "All our institutional shareholders and new shareholders bought into the opportunity to create value," he says.
"The rights issue was a pivotal moment because for the first time it put the company in a different place. Until then we were described – rightly – as 'troubled' because the banks had such an influence on us. The rights issue proved the story was being backed and it enabled us to focus more of our energy on the transformation of the company as opposed to the overheads."
With the debt situation almost resolved, and a new banking facility in place with HBOS, Woodward is focusing on the television strategy. He is a year into a three-year plan and if that first year was about laying the foundations, this year is about demonstrating growth, which he sees coming from three components of the business: content, advertising sales and online.
Advertising remains tough but a shift in tactics has helped. "The days when we could open the doors and it would come in have gone. We have to be on the front foot, making sure for instance that local advertisers do not get pushed into off-peak programming."
The online business, as with most media organisations, is a focus for growth, albeit from a small base and with no one clear about how to fully harness the power of the internet, but with a daily reach of two million people and two sites expanding the television experience, Woodward says the opportunities are vast.
But programming lies at the heart of the company and is a political, commercial and creative hot potato. The controversy over hiring Alan Clements, husband of BBC Newsnight presenter Kirsty Wark, as head of content, remains locked in legal argument. Clements lost his high-profile hearing in the London high court where he attempted to be released from a contractual agreement with RDF Media. The company is preventing him from working for SMG until the end of this year and he is appealing against the verdict.
However, Woodward revealed that he would have to consider hiring a replacement, although Clements would be offered a job in due course. "Clearly we are disappointed not to have Alan Clements on board. There will be a role for Alan Clements but not necessarily the same role. It will be a senior role within the content team and will clearly use his skills.
"We have not appointed someone else (as head of content] but we continue to talk to others. We need to continue investing and making programmes and if we have not appointed someone by the time he joins us then he will be it."
The wider debate over the quality and quantity of Scottish programming never goes away. It is being examined by the Scottish Broadcasting Commission and was the subject of First Minister Alex Salmond's address to a Royal Television Society debate at SMG headquarters last week.
Salmond told his audience that "Scottish broadcasting faces a real challenge" and noted that Scotland's share of total UK network production fell from 6% in 2004 to 3% in 2006. Over the same period, independent network productions in Scotland fell from 180 hours to a little over 100 hours. "On coming to office the new Government was angered by these figures. But not surprised," he said.
Woodward welcomes the debate about broadcasting in Scotland – "the first for 50 years" – and he recently addressed a cross-party meeting of MSPs on a range of issues likely to have included the "huge regulatory hurdles" and a need to clarify the distinction between nations and regions in the quota system.
He is grappling with regulator Ofcom's recently launched review of contract rights renewal, the system devised at the time of the merger of Carlton and Granada to protect other companies – essentially SMG and Ulster – from the advertising monopoly it would create. Under CRR the sum advertisers pay is related to viewing figures, but in an era of multi-channel television it is deemed to have worked against the terrestrial channels. Woodward wants to be sure that whatever replaces it will not be to SMG's disadvantage.
But he acknowledges the wider issue. "At a time when the industry is going through a tough period there is an artificial brake on the leading commercial channels," he says. "The fact that a debate is now going on in Scotland provides an interesting backdrop to what we are trying to achieve."
He hopes the long-running battle for independent television production status may be reaching a conclusion. Currently, independents must account for 25% of a commissioning company's quota, but SMG believes its own production business has missed out as its status has been unclear. "People erroneously believe that because we are part of the ITV network we have some special influence on ITV commissioning, which could not be further from the truth."
New European legislation appears to favour SMG's claim that it does not have commissioning influence beyond its own borders and this is a key feature in its attempts to get the issue resolved. Woodward says the industry also needs to recognise how much the sector has changed. "The indies have grown, and we have super-indies that no one envisaged," he says. "RDF Media is now bigger than us."
With the EU legislation on board, it appears likely that in England and Wales SMG would be labelled an independent while in Scotland it would be regarded as having a commissioning influence. "I would like to think it will be resolved this year. But getting independent status only gives us a level playing field, we still have to make great programmes."
The past month has been one of mixed fortunes with a new commission for Taggart but not for Ian Rankin's Rebus. A recent triumph has been Postcode Challenge, which has been a ratings success with up to 400,000 viewers and which has opened up a new line of programming opportunities. It beats the network during its time slot and its run of 40 programmes will take it through to the autumn, with talks under way on the next batch.
It has been created with the Dutch company behind the People's Postcode Lottery and is a unique partnership that may be repeated with other companies. It is a vindication of Woodward's strategy as he identified such partnerships as an early ambition. "I can't think of another broadcaster in the UK that is doing this," he says. "We will now look at similar deals with third parties and we have a few things in mind."
It will doubtless feature in a new strategy now being worked on and which may be addressed, at least in part, at the company's year-end results statement next month. Investors will be hoping that SMG's fortunes are on the turn and that the board will provide a good reason for them sticking with the company. But as to what to expect, Woodward remains enigmatic. "We have never said what comes next," he says. "That is not for now, as we are still in the middle of turning around the company."
Tuning into fresh focus on broadcasting north of the borderThe Scottish Broadcasting Commission was set up by First Minister Alex Salmond last summer to reverse the declining number of programmes produced north of the border.
According to Ofcom, Scotland's share of total UK network production fell from 6% in 2004 to just 3% in 2006.
At the same time independent network productions fell from 180 hours to just over 100 hours. The value of production activity in Scotland in 2006 stood at just £111m.
Chaired by Blair Jenkins, pictured right, former director of broadcasting at STV, the Commission's 10 members have until August to come up with a strategy to revive the sector.
The members, who also include Norman Drummond, former chairman of the Broadcasting Council for Scotland, have already highlighted significant problems.
In an interim report published in January they accused the BBC of wrongly labelling several programmes as Scottish when they had no or little financial or creative link to the country.
Programmes such as the drama Waterloo Road, which is about an English secondary school, had been attributed to Scotland when there was no obvious connection. The commission has already secured a pledge from BBC director-general Mark Thompson to increase Scotland's proportion of the BBC network programme budget by 9%. Thompson called this target "a floor rather than a ceiling".
Channel 4 chief executive Andy Duncan has also said he would like to see more commissions coming to Scotland.
But many, including ITV boss Michael Grade, have made clear the huge challenges the commission faces.
Earlier this year, Grade blamed the poor number and standard of Scottish programmes on a lack of talent and ideas north of the border. He said Scottish TV also suffered from a "talent exit problem" with many of its best producers and writers heading south.
Salmond is keen for the commission, which also involves comedian Elaine C Smith, to set quotas to define what is a Scottish production. In a speech to the Royal Television Society last week, he said: "Here I would argue that Ofcom's benchmark of out-of-London production is a sensible starting point for defining Scottish activity – requiring at least 50% of staff and production activity and 70% of total spend."
Jenkins, who was also head of news and current affairs at BBC Scotland, is, however, confident that Scottish production can be turned around. Earlier this year he said: "We have noted that since the work of the commission began, not only has there been an apparent increase in commitment shown by broadcasters and others to address the low level of production in Scotland, but this is already turning into action."
Nathalie Thomas