There's still plenty of life in old revenue streams yet
A view from Maisie McCabe

There's still plenty of life in old revenue streams yet

Both Trinity Mirror and ITV’s results this week brought good news for anyone interested in ad-funded legacy media companies. While Trinity Mirror is (very) far from being at the same stage of its recovery as ITV, the business is paying its first dividend in seven years. It is a shame for Simon Fox that the beginning of the phone-hacking trial overshadowed such good news. Although, judging by its share price, investors aren’t too scared.

ITV, meanwhile, is so confident about the future that it is rewarding its investors with a special dividend. Even against its performance of recent years, the broadcaster’s TV ad growth was strong – up 6 per cent comfortably ahead of the market, no doubt helped by all that lovely Omnicom money that would have ordinarily gone to Channel 5. It is particularly cheering that revenue growth looks set to continue into April, where the comparisons get harder.

A strong ITV is good for the rest of the TV market but also for the wider ad industry. Better programmes on ITV mean more people will see the brilliant (and not so brilliant) ads creative agencies slave over. Those same viewers also push down the cost of advertising on TV, helping media agencies with their spreadsheets.

When Adam Crozier became the chief executive at ITV five years ago, he was taking over a business that was in need of transformation. When Michael Grade announced he was to step down as chief executive in 2009, he had presided over one of the worst-ever downturns in ad revenue. That, combined with extensive cost-cutting and ITV’s share of viewing declining, meant investors’ confidence in its existing business model was low.

TV audiences are declining but not all video-viewing now comes from people sat on the toilet looking at their mobile

These worries were reflected across other ad-funded companies. The perceived value of the listed newspaper publishers collapsed, for example. The market cap of Trinity Mirror dropped below the value of the buildings it owned. At the same time, investors rushed to make bets on the new pure-play digital world, accepting crazy multiples in the hope they’d found the next Google.

ITV has done the unthinkable by combining genuine growth in its existing advertising business while generating increasing revenue from other sources – a feat newspaper publishers are finding more difficult. It seems sometimes it is possible to grow the pie.

Old revenue streams do not always need to be scrapped to benefit from new ones. Crozier is good at patiently explaining how TV works. Yes, TV audiences are declining, but it is not like all video-viewing now comes from people sat on the toilet looking at their mobile. We should all keep trying to tell the story of what is happening, however excited we get about the future.