ITV Digital Losses Weigh Heavy On Granada As Job Losses Continue
Granada released its preliminary end of year results this morning revealing losses of £185 million for the year and admitting that more jobs would have to go. In addition to the widespread downturn in the advertising market, Granada faces mounting losses at ITV Digital. Losses at Granada’s digital media division, which includes ITV Digital, rose to £234 million from £185 last year.
Hope for ITV Digital came in the shape of the Government’s announcement on Monday that it would amend legislation so as to allow further ITV consolidation (see Cross Media Ownership Rules To Stay, Says Jowell). Charles Allen, executive chairman said; “we welcome this week’s confirmation that the Government will lift the statutory hurdles to full ITV consolidation and believe this offers the prospect of more efficient and effective ITV which will benefit viewers and advertisers.”
The group pledged to reduce ITV Digital costs by 104 million in 2002. “ITV Digital have implemented a plan that will reduce costs and improve performance by 145 million stg in 2002 and in ITV Sport we are focused on extending carriage,” said Allen. “In addition, we are exploring a range of options that will improve shareholder value by reducing the cash burn and improving the break even point,” he added.
Unsurprisingly advertising revenues for the 12 month period have been hard hit by the global downturn. Total group revenue declined by 12% year on year and net advertising revenue for the year came in at £1.76. Granada’s net advertising revenue, which accounts for 51% of ITV sales, was £889 million – again 12% lower in comparison to last year.
The ITV Sport channel cost the group £11 million and reports this morning suggest that ITV cannot afford to make £184 million in payments still outstanding for its three year contract to televise Nationwide League and Worthington Cup games. ITV denied this although it is clear that without carriage on Sky the future of ITV Sport may be in jeopardy (see ITV Sport Closure Threatened By Cost Of Nationwide Contract, Says FT).
“ITV Digital and ITV Sport are the key priority. ITV Digital have implemented a plan that will reduce costs and improve performance by £145m in 2002 and in ITV Sport we are focused on extending carriage. In addition, we are exploring a range of options that will improve shareholder value by reducing the cash burn and improving the break even point.” said Allen.
