Adam Crozier and Archie Norman are the lottery winners at ITV

ITV made £320m in pre-tax profits in 2010 and, more crucially, managed to reduce its debt from £612m to £188m and pension deficit from £436m to £313m.

Even better for the dynamic duo of CEO Adam Crozier and chairman Archie Norman (and shareholders of course) it now has £860m in cash and ‘cash equivalents’ sitting on its balance sheet.

So, as with all lottery winners, the question is: what are they going to do with the loot? Some of it’s going to be returned to shareholders as ITV reinstates its dividend in July, £75m (a rather modest amount) will be spent over the next three years on internal investment and the company may decide to buy a big indie production company like All3Media (formed by the then unwanted Granada executive Steve Morrison) to boost production arm ITV Studios.

But indies, even big ones, don’t make that much money – not least because broadcasters beat them down over price.

And some cash will no doubt be put aside for a rainy day as CEO Crozier warned that revenue growth may slow after a spectacular 2010 (when ITV took over £2bn) and strong growth in the first quarter of 2011.

So why are Crozier and Norman lottery winners?

Well in their first year at ITV they haven’t done much that wasn’t being done already apart from kick out Gary Digby and his sales team and replace them with Fru Hazlitt, Simon Daglish and Kelly Williams as part of a strategy to boost its commercial activities away from TV spot advertising, which is where three quarters of the money comes from, the rest is ITV Studios.

Even this is misleading as most of ITV Studios’ sales are to ITV anyway. So spot advertising is really where nearly all the money comes from.

In essence the numbers reflect departed executive chairman Michael Grade’s strategy which was to make more and better programmes to position the company for recovery when the recession finished (which, sadly for him, it didn’t on his watch).

And Grade, despite his misleading cuddly image, also did the heavy lifting in terms of reducing staff numbers, the main reason why ITV’s increased revenues have whooshed so quickly into profits.

Arguably Crozier and Norman should be vowing to spend much more on content, like the expensive but successful Downton Abbey, and worry less about online and digital.

This would mean telling the City that ITV, dependent as it is on advertising, is a cyclical business and therefore bound to take a powder early on in any forthcoming recession.

Crozier thinks he can produce a more ’rounded’ company that can escape such swings and roundabouts but, in truth, he’s about the only one who does.

It’s a laudable aim but the trouble is that, if it doesn’t happen, ITV shares will still head south as soon as the economy turns down (they’re currently 90p or so after dropping down in the 20s).

Crozier and Norman are lucky to have walked into ITV just when the terms of trade were turning spectacularly in their favour. Their real test is what they do with their cash windfall.

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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.