ITV revives ad revenues - but for how long?

By Emma Haslett, managementtoday.co.uk, Wednesday, 27 July 2011 12:35PM

The broadcaster's had a reasonably decent six months. Although it's not out of the hot water yet.

After all the pain caused by the collapse in the ad market during the downturn, it looks like ITV has bounced back – er, sort of. The broadcaster’s ad revenues rose by 2% year-on-year over the six months to June 30. That might not sound like an awful lot, but let’s not forget that it was always going to be at a disadvantage, considering the World Cup took place this time last year. So while it’s not a dramatic recovery, it’s nevertheless good news. So much so that ITV says it’s going to resume paying a divi – the first since early 2008. So things must be chugging along reasonably well…

Its financials certainly provide plenty of evidence of that: ITV’s revenues topped £1.02bn, up from £987m during the same period last year. And pre-tax profits almost doubled to £181m, up from £97m this time last year. And it’s managed to increase audience share, too – albeit by a smidge at just 1% - to 40%. Not bad going, particularly considering Daybreak’s ever-dwindling audience figures.

Unfortunately, things aren’t likely to continue in the same vein. In fact, it sounds like ad revenues are set to drop faster than Matt Cardle’s post-X Factor profile. According to its figures, it’s expecting National Advertising Revenue to fall by 2% in July, then 4% in August and then remain flat, come September. Although ITV was keen to point out that it’ll still be ahead of the market.

Still, it’s called into question whether in an industry where diversification is the name of the game, ITV is still too reliant on ad revenues. According to CEO Adam Crozier, it’s planning to launch a micro-payment platform next year, which will allow viewers to pay to watch online content. Mediateque director Mathew Horsman pointed out, though, that it might need to think wider than that. ‘They have a few channels behind the pay-wall – some HD channels on Sky – but really they haven’t done much in regard to getting new sources of revenue into the company,’ he told the BBC. It hasn’t, for example, had an international hit since Dancing on Ice, back in 2006.

What’s encouraging is that Crozier maintains that the company is well on-track to achieve its five-year rescue plan (although the last company he was in charge of was Royal Mail, and look what’s happened to that). Debt, for example, is down from £188m at the beginning of the year, to £52m now. But to keep that money coming in, now is the time to put more effort into thinking outside the box. As it were.

This article was first published on managementtoday.co.uk