Adam Crozier, CEO of ITV, stressed there are “no quick fixes or silver bullets” announcing today’s half-year results. Crozier has set a target of half the broadcaster’s ad revenue not coming from terrestrial TV within 5 years. Right now 74% of ITV’s income comes from TV spots. Crozier said ITV can’t continue being so reliant on “one volatile source of income”. The UK pay-TV ad market is currently worth £6 billion a year, while online advertising is worth £3 billion. “ITV has a zero per cent share of that,” he said.
Crozier said that ITV1’s programming budget will increase by £50 million to £800 million for the next two years. That’s still £20 million down on what it has spent this year – although most of that extra cash went to the World Cup. He also unveiled a separate £75 million fund for projects such as improving the ITV.com website over the next three years. Crozier thinks it’s crucial ITV improves its clunky web experience, especially with Project Canvas around the corner. Crozier expects to see tangible results of ITV improving its programming within 18 months.
As for what these new programmes will be, Crozier emphasised shiny floor light entertainment shows and long-running series as opposed to the two-night dramas ITV has been showing of late. Crozier pointed to US studio dramas as one way forward. The broadcaster singled out its remake of The Prisoner as a drama that failed.
Confirming that Sky will be carrying ITV’s high-definition channels ITV2, 3 and 4 from October, Crozier emphasised the deal means new carriage revenue – cash Sky will have to pay for carrying the channels. A time-shifted ITV+1 channel will launch in January 2011. ITV will talk to pay-TV operator Virgin Media about its carrying the HD bouquet next.
Crozier confirmed that ITV had looked at buying Channel 5 before walking away. In the end, he decided acquiring another ad-reliant, free-to-air broadcaster as “buying more old iron”.
Earnings Before Interest Taxation and Amortization (EBITA) was up £119 million at £165 million for the first six months of 2010. Total revenues reached £987 million (£909 million). This performance, coupled with ITV slashing costs, reduced debt from £612 million to £437 million.
ITV Studio’s internal revenues, supplying programmes to the network, were flat at £128 million. As a percentage of what ITV Network spends on original commissions, ITV Studios’ share was also flat. ITV Studios’ external revenue shrank by 25% in the first half to £126 million (£168 million in 2009). Despite this, ITV Studios EBITA was up 8% on the previous year at £43 million.
Now comes the hard part. Sitting round a board room figuring out where to go is the easy bit. Crozier and chairman Archie Norman now face the much harder task of delivering on the strategy.