ITV Profits Gets X Factor Boost

There has been a major profits surge for the commercial broadcaster, ITV.

It has reported that pre-tax profit almost tripled last year to £321m thanks to a market-beating 16% boost in TV ad revenues, but its programme making division struggled as earnings dropped more than 10%.

ITV reported total revenues up 10% to £2.06bn in 2010, fuelled by a 16% rise in TV ad revenues thanks to hit shows such as The X Factor.

It has planned to reinstate a dividend payment at its interim results in July, has seen its share price rise 2.6p, just over 3%, to 88p in early trading off the back of the positive results.

The broadcaster said that the strong market has continued into the first quarter with revenues on track to be up 12%, with April set to be up between 8% and 12% thanks to the Royal Wedding and Easter.

Specifically, ITV reports total external revenues up 10% to £2,064m (2009: £1,879m) and that it has outperformed the television advertising market driven by the strong recovery and the continued focus on reducing costs.

ITV said it has adjusted earnings per share increased to 6.4p (2009: 1.8p) and that net debt has reduced significantly to £188m (2009: £612m) providing a sound financial platform for the future.

However, ITV Studios profits have declined to £81m, emphasising the need for what it has called 'creative renewal'.

Adam Crozier, ITV plc Chief Executive, said: "Last year we set out a comprehensive five year plan for the transformation of ITV.

"In this first phase, our outperformance of the television advertising market - together with the actions taken to reduce the Group's cost base and the focus on cash generation - have delivered substantial debt reduction and a sound financial platform for the challenges ahead.

"But whilst the recovery in television advertising is clearly very helpful, it also serves to remind us just how volatile this market can be.

"That is why we remain fully focussed on delivering our five year Transformation Plan to ensure that we have a more balanced and robust business going forward," he said.

"Our objective is to continue to outperform the TV advertising market, to invest in technology and our online capability, as well as our content business through the creative renewal of ITV Studios. We remain committed to our strategy of creating great content, delivering and exploiting it across multiple platforms and selling it internationally.

"We're still in the first phase of our transformation and making good progress, with a real momentum for change being built up within ITV.

"We have a new, talented top team in place and around a third of the wider leadership team has changed over the last few months. The organisation is becoming leaner and a further £15m of overhead and cost reduction is expected to be delivered this year," he said, noting that ITV remains cautious.

"We will continue to plan prudently, in terms of the economic outlook and its impact on the TV advertising market," he noted and concluded that: "Given the improvement in our cash performance and balance sheet, the Board intends to renew the payment of a dividend at our interim results in 2011."

(BMcC/GK)