Amid news of accelerating half-year profits fuelled by growing ad revenues, ITV said that it has high hopes it will be able to persuade Ofcom to significantly reduce its licence payments owing to a faster-than-expected move to digital TV.
ITV is deep in negotiations with Ofcom regarding the cost of its broadcasting licences, estimated to be currently running at £200m a year, due for renewal in mid-2005. The company said that it is now widely accepted that a range of factors will affect these, such as lower-than-expected total television advertising growth, faster digital penetration than anticipated and an accelerated timetable to digital switchover. This means that the value of the ITV analogue licences has declined, and the company will therefore be looking to achieve significant savings on its licence payments.
ITV is also in discussion with Ofcom regarding its review of public service obligations across all terrestrial channels. This may impact the level of public service genre programming on ITV1, which currently accounts for around a third of the schedule. Ofcom will publish its conclusions and recommendations later in 2004.
ITV's pre-tax profit before goodwill amortisation and exceptional items for the six months to June 30 was £132m and the company raised its expected merger cost savings target from £100m to £120m.
Turnover for the six months to 30 June 2004 on continuing operations less joint ventures was up 1% at £989m (2003: £977m). Net advertising revenue of £760m (2003: £729m) is up 4% reflecting growth of 3% from ITV1 and 68% from ITV2 and the ITV News Channel.
The company says that the strong growth in the first half has continued for the three months to 30 September 2004 during which advertising revenue from the combined ITV1, 2 and News Channel is estimated to be up by 5.5%.
ITV has confirmed an annualised increase of £36m in multichannel programme investment with a target of delivering £150m of multichannel revenues by the end of 2007. This will enable a doubling of ITV2's programme budget and support a strong launch schedule for ITV3, due to launch on November 1.
ITV3 will target the 35-plus demographic with a collection of dramas and films. This demographic represents a significant commercial opportunity for ITV. It controls more than 80% of the nation's wealth and ITV says it is currently underserved in the UK.
Lovelacemedia | 09.09.2004