Improvements in the ITV schedule are beginning to deliver results and after a period of consolidation this year, the network will see advertising growth of 3.5% in 2004, according to a new forecast from ABN AMRO.
ITV’s share of the television market slipped below 54% in 2002 and sages are predicting a further 2% decline this year. This prompted ABN to revise its 2003 ITV advertising growth forecast from a gain of 1.5% to a loss of 1.5%.
However, the bank’s analysts claim that overriding concerns about war and falling market share have clouded the fact that programming changes at ITV are having the desired effect with peak time audience share up by 1.5 percentage points in January. The broadcaster has pledged to plough more money into programming content and assuming an 8% increase in investment, ABN has raised its 2004 ad growth forecast from 2% to 3.5%.
The report also cites key changes to the Network Centre’s organisational structure and the long awaited implementation of the new BARB audience rating system as factors which should benefit ITV in the near future.
Despite this upbeat assessment of the outlook for ITV, it is acknowledged that a conflict in the Middle East could throw a spanner in the works. The outbreak of the Gulf War and the attacks of September 11 both led to an overall reduction in adspend and ABN claims that even a short war with Iraq could result in a 3% decline in TV revenues.
Nonetheless, ITV is advised to continue its investment in content as it was the failure to commit sufficient funds to programming that was partly to blame for the decline in audience share from 26.7% to 24% in 2002. Excluding spending on sport, the channel actually reduced core spending by 9% over the course of the year and this mistake was compounded by errors in scheduling.
Increased multi-channel penetration and fragmentation of audiences will continue to impact on ITV which has also had to contend with a resurgent BBC. There are fears that Freeview could also hit the channel’s viewing figures but ABN notes that ITV2 has actually been the most popular non-terrestrial channel on the new platform.
Assuming that spending increases are maintained, the report concludes that the rate of decline of ITV audiences will slow and its share of the market will plateau at 20% by 2010. On that basis, the channel will be able to deliver 1-2% top-line revenue growth for the foreseeable future.
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