ITV will deliver “efficiency savings” of £100 million by the end of 2008 through “business re-engineering and operational reviews”, according to the latest trading update from the broadcaster.
It will also launch a +1 channel for ITV2 on satellite and cable next year, fuelling speculation that the launch will be a holding platform for a new standalone digital channel as part of ITV’s digital investment programme.
The report said the broadcaster would invest £20 million in programming for its digital channels and that it had identified new revenue streams from its digital channels that would increase revenue from £715 million in 2005 to between £1.2 billion and £1.4 billion by the end of 2010.
ITV said it would save £30 million a year from reduced sports programming costs and another £30 million from “schedule efficiencies”, including reduced PSB commitments.
It added that the company would be slashing £40 million off its costs from “overhead efficiencies”. These savings follow on from £120 million in costs that were stripped out of the company following the merger in February 2004.
The news is likely to be greeted by ITV workers with some anxiety, after the company this week announced the closure of Granada Bristol and ITV Productions Kids and axed jobs earlier this month (see News Channel Job Cuts). Many now fear there will be more closures to help ITV chief executive Charles Allen hit the savings target.
As part of the update, the company also revealed that it would be increasing the amount of cash it would be returning to shareholders from £300 million to £500 million in 2006.
ITV’s total net advertising revenue at the half year is estimated to be down 4.6% year on year, but added that its total revenue is estimated to be up by 2% on 2005 for the same period.
Allen said: “We continue to set ourselves aggressive targets. ITV with its strong brand, original content, Freeview capacity and cross-promotional capability is uniquely well-positioned to benefit as the UK television market continues to fragment and the number of outlets and demand for high quality content continues to increase.
“We have a renewed focus, a clear strategy and the right management team that will enable us to deliver increasing value to our viewers, advertisers and shareholders.”
The news comes as the company admits that ITV1’s advertising revenues are in a downward spiral (see ITV Ad Revenue To Tumble) and investment in programming is under threat. The World Cup has failed to curtail the losses and ITV1 looks set to lose up to £250 million in ad revenues next year.
ITV believes that once digital switchover is completed for television viewers in 2012, its audiences will stabilise across all its platforms and compensate for the drop in audience figures at ITV1.
The broadcaster launched ITV4 last year and bought Friends Reunited, and will exploit the online brand to develop programming ideas across all its channels.
Related Links
