ITV profits fall despite Grade turnaround plan
Mar 6 2008 by Iain Laing, The Journal
ITV boss Michael Grade insisted that his turnaround plan had attracted viewers and advertisers back to the broadcaster as he posted a fall in profits of more than a third.
While his first full year at the helm resulted in a 35% drop in annual profits to £188m, Mr Grade said the ITV stable of channels had delivered their first viewing increase last year since 1993.
The broadcaster – whose flagship channel ITV1 is home to shows such as Britain’s Got Talent, Lewis and Wild At Heart – was also outperforming the competition in terms of ratings and revenues, he said, with total net advertising sales up 2% so far this year.
Shares in the group have nearly halved in the past year as the difficult advertising market took its toll.
Mr Grade promised a content-led overhaul when he started the job in January 2007, and said yesterday: “The first priority for ITV was to stem the decline. We did more than that, delivering an increase in viewing to the ITV family for the first time in over a decade.
“For the first time in many years, ITV1 outperformed its competitors and we’ve continued to do so into 2008.
“The viewers are coming back to ITV, followed by advertisers. The key, key metric of our on-screen performance has absolutely turned around.”
The former Channel 4 boss and BBC chairman said he was focused on a three to five-year growth plan. Last week he unveiled the former BBC1 controller Peter Fincham – the man behind the corporation’s revamped Doctor Who series – as his new director of television. He lost his job at the BBC in October after broadcasting a trailer incorrectly suggesting that the Queen had stormed out of a photo shoot.
“We are fixing the fundamentals of the business and the earnings will follow if we maintain this progress,” Mr Grade said.
“The thing that has excited me the most is that we have been able to attract both behind and on the screen the best talent in the UK.”
ITV’s total channels viewing share nudged up 0.1% to 23.2% last year, but the share for ITV1 dipped 2.1%. But this drop was better than double-digit declines for rival commercial terrestrial channels Channel 4 and Five, the broadcaster said.
The decline in ITV1’s advertising revenues, which comprise 82% of the £1.49bn total earned in 2007, also slowed last year, falling 4% year on year compared to a 12% drop the year before.
Total ad revenues were flat last year, and Mr Grade said industry estimates for the spend for 2008 ranged from being flat to 1% growth.
Pre-tax profits for 2007 came in at £188m due to lower ad revenues, lower TV show phone-in income in the wake of last year’s viewer voting scandals, and increased investment in digital channels.
Total revenues of £2.1bn last year, compared to £2.2bn in 2006, suffered a £58m hit following the suspension of premium rate telephone services on a number of programmes.
