ITV’s renewal plan pays off

The British broadcaster ITV declared victory in its transformation plan yesterday, returning cash to shareholders after strong international growth and new revenue streams helped it to beat 2014 profit forecasts.

Adam Crozier took over the top job at ITV in 2010 when Britain’s biggest listed free-to-air broadcaster was on its knees, buffeted by the fluctuations of advertising markets and haemorrhaging viewers to the higher quality programming coming from the publicly owned BBC.

Asked to restore the company to its glory days of the 1990s, Mr Crozier set about expanding its production business, developing new online platforms and improving the quality of its programming.

Yesterday, the home of the period drama Downton Abbey said it would mark the improvement with a £250m (€345m) special dividend and a 34% hike in the full-year dividend, sending its shares up 4%.

The stock is now up more than 240% since the 51-year-old former Royal Mail boss took over.

“Management is declaring victory on its five-year transformation plan,” said Hargreaves Lansdown analyst Keith Bowman.

“A more balanced business, less reliant on volatile advertising revenues and the UK, has been created, with the next phase of its strategy now being pursued,” he said.

Of ITV’s various revenue streams, the online, pay and interactive division was up 30% to £153m and the ITV Studios business grew by 9% to £933m, with almost half the revenues from that division coming from outside Britain.

Total net advertising revenue was up 6% to £1.6bn, while revenue from non- advertising sources rose 10% to make up 45% of total revenue.

The company’s total external revenue for 2014 was £2.59bn. ITV also said it had started 2015 well, with net advertising revenue forecast to be up 11% in the first quarter, and up 4% to 7% in April.

The one weakness in the results was the group’s share of viewing, which fell in 2014 after rising in 2013. ITV said this was in large part due to a weaker performance from its main ITV1 channel.

Mr Crozier told reporters that ITV’s linear broadcast television had held up well, but had struggled to keep up with the BBC, which he said had outspent its competitors. ITV plans to increase its total network programme budget by around £20m to £1.04bn to counter this trend.

In total, full-year pretax profit was up 23% to £712m.