ITV unveils pay-TV deal with Sky

ITV has announced a new pay-TV deal with BSkyB, along with its half-yearly results.

The agreement will mean that HD versions of ITV2, 3 and 4 can be purchased through a subscription with Sky. The channels will become available in autumn, with ITV2 being the first to come out in October. The deal is non-exclusive, however, and ITV has confirmed that it is in talks with other providers.

This pay-TV deal, along with a £75 million investment fund, forms part of a five-year plan intended to overhaul ITV’s current business model. 26% of revenue is currently derived from non-advertising sources, and the broadcaster is aiming for this to increase to 50%.

Adam Crozier, chief executive of ITV, said: “For the past decade ITV has not faced up to the challenges presented by the rise of internet-based platforms, the continuing growth of pay TV and subscription services and the globalisation of content.

“Our priority for the next 18 months is to make ITV a creatively dynamic and fit-for-purpose organisation while maintaining strict financial controls. Over time we expect to move to a position whereby half of ITV’s revenue base will be derived from non-television advertising sources and today we are announcing our move into pay television with the agreement to make HD versions of ITV 2, 3 and 4 pay channels on Sky.”

This announcement came as ITV reported its results for the first half of the year. Adjusted pre-tax profits came in at £118 million, and earnings before interest, tax and amortisation rose from £46 million to £165 million year-on-year. TV advertising revenue increased 18% year-on-year.

The programme budget will be kept below £800 million in 2011 and 2012 – a decrease from 2010’s £820 million budget, but £50 million more than had previously been planned.

Net debt was reduced to £437 million, from £612 million, and its pension deficit is £449 million.

Adam Crozier will be holding a special audience Q&A session at MediaTel Group’s TV summit on 25th November. Click here for more information or to book your ticket.