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ITV profits: never mind the ratings – feel the money

How can you increase revenue and profits (by around eight per cent and 30 per cent respectively while your market share is falling?

Run the UK’s biggest commercial terrestrial broadcaster of course. In other words, be ITV.

ITV-London-Television-Cen-008ITV’s ad revenue, now 55 per cent of the total with most of the rest coming from production, rose six per cent in 2014 (production revenues rose nine per cent) to hit £1.63bn even as its share of viewing fell five per cent, most of which it blamed on flagship channel ITV 1.

Life is getting harder for such channels, of course, with an ever-increasing number of digital rivals and more people watching catch-up TV in all its guises (ITV has ITV player). ITV has particular problems of its own with long-time ratings topper X Factor on a slow decline and the venerable Coronation Street lagging the BBC’s Eastenders.

But advertisers still want these big audiences for their big campaigns, even if the audiences aren’t quite as big as they were. And ITV, the famed ‘licence to print money’ of the 1960s, is still good at extracting top dollar.

It’s been helped rather significantly in this self-appointed task by Omnicom’s decision to pull all its clients’ money out of Channel 5 in favour of the rather more expensive ITV and Channel 4. Maybe Omnicom Media Group’s clients are all ITV shareholders and happy to trouser ITV’s special dividend of £250m (out of £712m pre-tax profits) rather than enjoy cheaper airtime. Or maybe not.

Anyway, it all means another bumper payday for CEO Adam Crozier but, let’s face it, the former boss of the Football Association done well.

Now Crozier’s job, with talented programme boss Peter Fincham, is to repair the share of viewing figures. This won’t be easy with no easy fix for X Factor and Downton Abbey apparently due for just one more series.

He also needs to spend some more of ITV’s money, partly to make it even bigger in production but also to make the company a bit more indigestible for a predator like Apple or Google. ITV may have its faults but such a development wouldn’t be in the interests of viewers or advertisers.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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