ITV Outlines Five Year Plan To Grow Business
ITV chief executive Michael Grade has today revealed a three to five year content-led plan to restore growth to the business.
The plan outlines ITV’s growth strategy in its content, broadcast, and online operations. ITV said that in its content business its objective is to double content revenues, including internal productions to around £1.2 billion by 2012.
The broadcaster intends to invest approximately £1 billion across its channels this year and has set itself a target of delivering a 38.5% share of commercial impacts across its channels in 2012.
It hopes to achieve this by maintaining and accelerating ITV1’s current ratings improvement and building on the success of ITV2 and turning it into the UK’s third commercial network for 16-34s.
ITV1’s programming budget will be frozen, whilst ITV2 will receive a £20 million increase to its programming budget.
The objective for its consumer business is to deliver £150 million in online revenues by 2010, with at least 75% to come from online display, video and local classified advertising.
Michael Grade, executive chairman of ITV said: “By 2012, I want ITV to be widely acknowledged as the UK’s favourite source of free, original entertainment across all popular platforms and devices, not just on television. Reshaped, revitalised and redeployed, ITV’s unrivalled assets will ensure that it is once again a top and bottom line growth business. The old ITV competed in a £6 billion market – the UK television advertising and programme market. The new ITV will be operating in a market worth double that – including new types of advertising, new and diverse revenue streams, all driven by our premium, mass appeal content, free to the consumer and valued by our advertisers.
“To achieve this we are implementing a content-led growth plan, built on ITV’s creation and ownership of the UK’s most valuable programmes. Our plan enables us to sustain investment in original programmes and content through self-funding. We will pay for new investment in content through greater efficiencies throughout the business and for major new business investments and acquisitions out of disposals of remaining non-core assets. ITV will continue to target dividend cover of 2 to 2.5 times. The current intention to hold the dividend reflects the Board’s confidence in the growth plan to rebuild cover to that level over the medium term.
“This is a plan rooted in self-help. Our priority is to put our own house in order, making our assets work better, harder and more in tune with each other.”
In a strategy update webcast this morning, Grade said that there would be no great risk of capital in order to get ITV growing again.
With regard to whether in a digital world there is still a future for a business built on television advertising, he said: “Television advertising is still a very, very potent force, which is why advertisers are so exercised over the price of ITV’s airtime and so on. And that will remain so for the foreseeable future.”
ITV recently revealed that it has commissioned a major new quiz show for its peak-time schedule to be made by Ant and Dec’s company Gallowgate Productions (see ITV Commissions ‘Major’ New Quiz Show For Flagship Channel).
Last week, the Office of Fair Trading announced that it will conduct a review of the imposed contract rights renewal (CRR) on ITV.
The review will begin early next year and be carried out in partnership with Ofcom (see OFT To Conduct Review Of CRR).
Grade said of the review: “If at the end of the OFT review of the CRR remedy a replacement is agreed upon, then obviously that will have benefits to advertisers, because it will mean we’re able better to invest in the programmes. And, obviously, hopefully it will benefit our shareholders at the same time.
“It will enable us to get a fair price for our airtime. Not an exorbitant price, a fair price, which we are denied under this remedy presently. What we need the OFT to do is to complete their review in time to meet the ’08 upfront negotiations for the contracts for airtime by the end of ’08, and we’re hoping to persuade them to speed things up.”
Grade also announced that its ITV Play call-TV programming will be axed by the end of the year, saying that the late-night strand has been damaged by the negative publicity over phone-in competitions.
ITV: 020 7843 8000 www.itv.com