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Profits soar at Adam Crozier’s ITV – but that may make the cash-rich UK broadcaster a takeover target

Thee late Lord Thomson, who lost a packet when he owned The Times and Sunday Times in the UK, also owned Scottish Television, part of ITV. And he famously described commercial television in the UK as “a licence to print money.”

UnknownWell it clearly still is: ITV boss Adam Crozier (left) has just announced a special (extra) dividend of 161m for shareholders following a 30 per cent leap in profits from £334m in 2012 to £435m in 2013.

We wait to see exactly what contribution the company’s energetic drive into digital under Fru Hazlitt has made to this cash pile but it’s safe to predict that good old TV advertising has contributed the major share. The other big earner is ITV Studios, the company’s production facility run by former Channel 4 programme chief Kevin Lygo.

CEO Crozier says: “ITV is now demonstrably a much stronger company both operationally and financially.

“Over the last four years we’ve grown our revenues and delivered double digit profit growth every year, our adjusted earnings per share has increased six-fold to 11.2p and our cash conversion has been consistently strong.

“While we’ve made good progress to date there is still much to do. We remain committed to our strategy for rebalancing the business, with growth increasingly coming from online, pay and interactive and from ITV Studios internationally.”

So what will ITV do next, assuming it needs to do anything different? Even as Crozier’s turnaround at ITV began (he was formerly boss of the Royal Mail) the sceptics doubted that ITV could ever become rich enough to challenge the likes of BSkyB in a UK TV market where all the growth seemed to be from pay-TV.

But now ITV itself is a player in this market (albeit in a small way) and with competition growing in pay (chiefly from BT Sport) the Sky formula no longer looks quite so fire-proof.

High-end TV advertising (on which ITV depends), once scheduled for the knacker’s yard by proponents of digital, has proved highly robust: most big digital ad campaigns begin with a blockbuster mass-market TV campaign before going online. This in itself is not due to ITV but the network, under capable programme boss Peter Fincham, has done a good job in, first, defending its viewing share against rival channels and then, in some cases, increasing it.

Crozier may decide he needs to do something with all that money rather than simply returning it to shareholders. He has made a number of small production acquisitions in the UK, Europe and US but steered clear of big deals so far, no doubt wisely.

But ITV is a quoted company and there will a number of giant cash-rich companies out there (Google, Apple, maybe even Facebook – who knows?) who may decide a cash-rich broadcaster with a priceless back catalogue would suit their purposes.

Content is king these days, after all.

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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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