ITV results: Encouraging progress but remain cautious

ITV has released its interim results for the first half of the year (ending 30 June 2011), claiming “solid progress” in the first year of its five-year transformation plan under chief executive Adam Crozier.

• Total external revenues up 4% to £1,027 million (2010: £987 million).
• EBITA before exceptional items increased 45% to £240 million (2010: £165 million) with the conversion of higher revenues into profit and the absence of Football World Cup costs.
• Adjusted EPS increased 86% to 4.1p (2010: 2.2p).
• Net debt improved to £52 million from £188 million at year end.
• Cost saving programme is on track to deliver £15 million of savings in 2011.
• ITV Family NAR up 2% in line with expectations versus a TV advertising market up 3%.
• Solid on screen performance with ITV Family SOV up 2% with ITV1 flat (2010: down 5%) and ITV digital channels up 11%.
• ITV Player now launched on Android phones, Apple devices and Freesat. Long form video views increased 64% to 180 million (2010: 110 million).
• ITV Studios external revenues increased 11% to £140 million (2010: £126 million) driven by strong international revenues, however, EBITA fell slightly as we invested in creative talent, and in developing and piloting new programmes.
• The Board has declared an interim dividend of 0.4p.

“We’re now one year into our five year transformation plan and making good progress on delivering our strategy of creating great content and exploiting it across multiple platforms and selling it internationally,” Crozier said.

“As today’s results show, our focus on costs, cash generation and improving the efficiency of our balance sheet gives us an increasingly strong financial base from which to drive our strategy forward.

“Despite the difficult economic backdrop and the absence of the Football World Cup, our advertising revenues increased by 2% and, while we continue to plan prudently, we expect to outperform the TV advertising market across the whole of the year.

“Improving our audience share is a key part of our strategy and we had a good start to the year on-screen right across the ITV Family with our share of viewing up 2%. So far this year ITV1 has launched 8 out of the 10 top new dramas, including Vera, Marchlands, Monroe, and Scott & Bailey, while ITV2 and ITV3 are the two most popular – and amongst the fastest growing – digital channels. We also performed strongly online with 64% growth in long form video views across all of our platforms.

“We’re investing in the quality and reach of our online offering. We’re making ITV Player more widely available, most recently on Android and Apple devices and Freesat. We plan to have a pay mechanism in place around the turn of the year so that we can test what viewers are willing to pay for, and we continue to work with our partners on YouView, which is on track for launch early next year.

“Our plan to renew and refresh our content business is beginning to gain momentum under the new top team in ITV Studios as we invest in reenergising the creative pipeline and in developing and piloting new programmes. While there’s still a long way to go, we’re starting to see potential in the level of new work coming through ITV Studios with 68 new commissions so far this year, of which 29 are international. Prime Suspect is being co-produced in the US for NBC while Julian Fellowes’ Titanic, also a co-production, is fully-funded and already pre-sold to 15 broadcasters around the world including ITV1. Other new entertainment programmes being produced for ITV1 include Holding out for a Hero, Born to Shine and Red or Black. These are early indications of the potential for ITV Studios’ creative output as we renew our commitment to the producer/broadcaster model.

“There are clear signs of momentum building in the delivery of our five-year transformation plan but we know there is still much to be done to rebalance the business as we adapt to the digital future. We’re encouraged by our progress to date and the prospects for ITV in the medium to long term, although we remain cautious about both the TV advertising market and the economy.”