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ITV: “Online demand growing strongly”

ITV has reported a 6 per cent rise in annual pre-tax profits of £641 million following strong revenue growth across the company. The UK’s commercial broadcaster said it expected to outperform the television advertising market this year, with the EURO 2016 football tournament in mind. Advertising revenue rose 6 per cent to £1.72 billion, with total revenue up 14 per cent to £3.38 billion.

Adam Crozier, ITV Chief Executive, commented: “ITV delivered another strong year as we continue to grow and strengthen the business in the UK and internationally. Revenues were up 15 per cent to just under £3 billion and for the sixth consecutive year we achieved double digit profit growth, as adjusted EBITA grew 18 per cent to £865 million, with all parts of the business performing well.”

“Our Broadcast and Online business remains strong with advertising revenue up 6 per cent and Online, Pay & Interactive up 23 per cent.  While our Family Share of Viewing was down 3 per cent for 2015 we have started this year well with SOV on our main channel up 5 per cent and ITV Family SOV up 2 per cent. We have a strong programme slate for 2016, with 50 hours more drama as well as major rugby and football tournaments. ITV uniquely delivers the mass audiences demanded by advertisers. Continuing to deliver this scale and reach, as well as further strengthening our onscreen performance, remains a key focus for the company and particularly for the new creative leadership in the Broadcast business.”

“ITV Studios continues to perform strongly both organically and from our recent acquisitions, particularly Talpa. Through our ongoing investment ITV Studios has become a global production business with total revenue up 33 per cent to £1.2 billion and with 53 per cent of revenues now coming from outside the UK.”

“We have a very strong international pipeline of new and returning drama including Victoria, Tutankhamun, Houdini and Doyle, Cold Feet, Poldark, Shetland, Aquarius, Endeavour and Vera as well as entertainment formats The Voice, The Voice Kids, Dance Dance Dance, I’m a Celebrity… Get Me Out Of Here!, The Chase, Hell’s Kitchen and Saturday Night Takeaway. ITVS has already secured a higher proportion of 2016 revenue at this point in the year than in previous years and our good drama slate gives us confidence into 2017.”

“We’ll continue to build scale and to capitalise on the strong demand for high quality content that travels, with a particular focus on investing in creative talent and scripted projects, and working with more channels and platforms in the UK and internationally.”

“In November we launched the ITV Hub, which is now the digital home for all our channels and services both live and on demand, with live viewing at centre stage. The Hub, which is available on 27 platforms, marks a major step forward in the quality, innovation and ease of use of ITV’s online service and has had a really encouraging start. Online demand for our content is growing strongly with people spending 42 per cent more time watching ITV online in 2015 than the previous year. Overall, our Online, Pay & Interactive business is rapidly growing and profitable and is on track to deliver double-digit revenue growth again in 2016.”

“We will continue to build our expertise in digital media to drive closer engagement with online audiences, develop more targeted and innovative advertising with new initiatives including AdSync+ and ITV AdVentures, and maximise our ability to monetise our content online as well as on pay channels.”

“For this year we anticipate that the phasing of our television advertising will be very different to 2015 due to the timing of major sporting events. We expect ITV NAR to be flat in Q1, marginally behind the market, against 12 per cent growth in Q1 last year. Q2, which will benefit from the Euros, should be positive. For the full year we again expect to outperform our estimate of the TV ad market.”

“ITV’s strong performance in 2015 builds on the consistently good results we have delivered since we launched our strategy six years ago. Given these results the Board has proposed a final dividend of 4.1p bringing the full year dividend to 6p, up 28 per cent, which is ahead of previous guidance.”

“As we look to 2016 and beyond we see further significant opportunities for growth across the company organically and through acquisitions and partnerships. Reflecting ITV’s ongoing strength and confidence for future growth the Board is proposing a £400 million special dividend, equivalent to 10p per share. Our strong cash generation and robust financial position gives us the flexibility to invest in growing the business while at the same time delivering returns to our shareholders.”

Paolo Pescatore, Director, Multiplay and Media at CCS Insight, commented: “Overall this is an encouraging set of results for ITV given the ongoing challenges it faces, with digital representing a strong and growing part of the business. The outlook remains positive as the company will air some key sporting events such as EURO 2016 and more drama, which should stimulate usage across all platforms. More importantly, it now has 13 million registered users to ITV Hub and needs to use this base with far greater targeted advertising; so we expect to see more in this area throughout the year.”

“We still firmly believe that ITV remains a takeover target, especially from the likes of BT. The move makes perfect sense and would be a key part of BT’s growing aspirations in TV. More so, in its quest to knock Sky off its perch BT has made a huge investment in sport, but it still has an inferior content position compared to Sky beyond sport.”

“Taking this into account, ITV fits the bill having bought numerous content production companies. Furthermore, ITV Studios is a very attractive asset for BT as underlined by these results; in 2015 the segment generated more than a billion in revenue. A potential acquisition will allow BT to differentiate its offering through original programming which is proving to be a key battle ground for all web providers such as Amazon, Netflix and others. It would also give BT a free to air platform to promote its paid for BT TV service.”

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