ITV Cuts Prompted By 'Flat' Advertising Revenue

ITV is to cut costs by an additional £35 million per year by 2010, following expectations that advertising revenue will fall to 20% in September compared to last year.

The commercial broadcaster published its interim results for the first half of 2008 this morning and they revealed that the company had posted a pre-tax profit of £91 million, a drop from £127 million during the same period last year.

However, revenue increased by 3% to £1.03 billion in the first six months of the year, thanks to gains in the company's global content and online operations.

ITV described the ad revenues for the first eight months of the year as "flat".

Commenting on the results, Michael Grade, Executive Chairman of ITV, said: "Almost a year into the Turnaround Strategy, we have made considerable operational progress. With more viewers watching more ITV programmes, we are delivering greater value for advertisers.

"We have out-performed the market in terms of advertising revenues and viewing share. Our global content business is growing strongly and our presence online is strengthening.

"Whilst our visibility on advertising revenues beyond September is limited, with a strong schedule in place for the rest of the year and planned for 2009, we are confident that we will continue to outperform.

"However, we cannot control the economic environment in which we operate. As a result of the recent slowdown in the television advertising market, the Board has taken some tough decisions.

"We are implementing a new cost efficiency plan which will deliver £35 million in additional annual savings by the end of 2010. We are taking a £1,600 million impairment charge on broadcasting goodwill and we are adjusting the turnaround targets for global content and online.

"We continue to work with regulators, making the case for an urgent reduction in ITV's regulatory burden.

"In the light of the uncertain economic outlook and the importance of maintaining programming investment, the Board has also reduced the level of the interim dividend to 0.675 pence per share.

"The Board's confidence in the Turnaround Strategy is reflected in the decisions we have announced today. In particular, we are committed to maintaining investment, notwithstanding the cyclical downturn.

"By holding our focus on delivering the Turnaround Strategy, we are confident ITV will be strongly positioned to grow as the economy recovers.

"ITV's long-term goal remains to create greater value for shareholders in the digital world from our position as the UK's favourite source of free entertainment," he concluded.

(KMcA)