Investors will no doubt be hoping that ITV’s plan to return to the pay-TV market for the first time in eight years will be a good deal more successful than it's last effort - ITV Digital - which collapsed under a mountain of debt. But some kind of pay-TV strategy does look necessary if ITV is to cope in the long-term with a trend of falling onscreen advertising revenues. Accordingly, ITV has launched a five-year plan that includes turning the high definition (HD) versions of ITV2, ITV3 and ITV4 into pay channels on Sky.
This news came with the group's half-year figures which reported that cash profits had risen from £46m to £165m - when adjusted for exceptional items. While TV net advertising revenue was reported to have grown by a market-beating 18 per cent year-on-year - largely thanks to the World Cup. ITV currently generates 74 per cent of its revenue from TV advertising but has lost market share at its main ITV1 channel, despite the raging success of such shows as Britain’s Got Talent and X-Factor. Indeed, viewing figures fell across all of its channels - although rival channels BBC, BBC2, Channel 4, and Five also saw declines. ITV online's revenues are still fairly insignificant at £12m, despite a 20 per cent rise in the period - after stripping out the impact of selling Friends Reunited.
ITV has been working hard, however, tackle costs and delivered £31m of savings in the period. The debt pile was cut, too, from £612m at the end of last year to £437m - although that’s still too high for a return to the dividend list. And ITV’s pension deficit stands at a heavy looking £449m, slightly up on the £436m a year ago.
Broker Panmure Gordon has left its full-year EPS estimate unchanged at 2.8p, rising to this year 4p in 2011 (1.8p in 2009).
ITV (ITV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 52p | MARKET VALUE: | £2.02bn | |
| TOUCH: | 52-52p | 12-MONTH HIGH: | 72p | 40p |
| DIVIDEND YIELD: | nil | PE RATIO: | 9 | |
| NET ASSET VALUE: | 10p* | NET DEBT: | 112% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 909 | -105 | -1.80 | nil |
| 2010 | 987 | 97.0 | 1.80 | nil |
| % change | +9 | - | - | - |
*Includes intangible assets of £998m, or 26p per share | ||||
