ITV, BRITAIN’S biggest commercial free-to-air broadcaster, will enter the pay TV market as part of a wider plan to generate about half its revenue from sources other than traditional – and often volatile – advertising.
The broadcaster, which saw its share price fall almost 85 per cent between June 2007 and April 2009 as ad markets collapsed, said it would also spend more on programming, online and digital content as part of its five-year turnaround plan.
New chief executive Adam Crozier, who has been scathing about the company’s previous strategy, announced the new plan as he revealed that first-half ad revenue was up 18 per cent due to the World Cup.
Ad revenue is expected to be up 15 per cent in the third quarter before comparatives with 2009 toughen, leaving the company more cautious for the end of the year and beyond, ITV said.
The recovery in advertising helped six-month revenue rise 9 per cent to £987 million (€1.2 billion), compared with a Reuters analyst forecast of £992 million.
Adjusted earnings before interest, tax and amortisation was in line with forecasts at £165 million. Cost-cutting helped to reduce net debt to £437 million from £612 million at the year end.
Mr Crozier, who restructured Royal Mail in the face of union resistance, said he wanted half of ITV’s revenue to come from non-advertising sources such as pay TV, sponsorship, content creation, online income and product placement.
“It is pretty obvious to me that being so reliant on one extremely volatile and declining source of income is not a healthy place for us to be in the long run,” said Mr Crozier. “We need to move away from that and rebalance the business. It will take around five years.”
Mr Crozier, who joined ITV at the end of April, said he wanted to improve the broadcaster’s ability to compete in the era of internet TV, pay TV, the globalisation of programming and the proliferation of digital channels.
ITV, home to shows such as Simon Cowell's The X Factorand Coronation Street, said it would put the high-definition versions of its digital channels on the BSkyB pay-TV platform as part of its push to develop new revenue streams. The deal, which would provide a guaranteed revenue stream, is not exclusive and ITV will talk with other pay TV platforms.
It will also work to improve the quality of its programming, so it can be sold abroad and online, with an investment fund of £75 million to be used over the next three years. – (Reuters)
