ITV’s production performance steers value to £10bn

ITV’s pre-tax profits rose to £641m in 2015 – £843m on an ‘adjusted’ basis, which is a hell of an adjustment – with total revenue up 14 per cent to £3.38bn. Ad revenue rose six per cent to £1.72bn with programme maker ITV Studios bursting through the £1bn mark for the first time to £1.23bn, helped by a number of acquisitions including Endemol founder John de Mol’s Talpa.

CEO Adam Crozier (below) claims ITV is now the world’s most profitable programme maker outside the Hollywood studios. Being able to sell to ITV obviously helps but Crozier’s strategy of building up programme sales is clearly working, to the extent that ITV is able to return £400m to shareholders in a special dividend.

All this despite ITV viewing dropping by three per cent. ITV viewing may be in relative decline but it’s still comfortably the biggest channel in the UK. A worry for Crozier and new programme boss Kevin Lygo is the end of worldwide best seller Downton Abbey and the decline of all things Simon Cowell, most notably the X Factor. X Factor pulls in the big money at Christmas.

Decades ago Lord Thomson, who owned Scottish TV as well as the somewhat less profitable Times and Sunday Times, described ITV as a “licence to print money.” It clearly still is, even in a much more competitive market with audiences fragmenting and the big media agencies driving much harder bargains than happened in the full service agency days of yore. We don’t know what ‘rebates’ ITV has to give to its biggest agency customers but some of its advertiser clients might like to know.

Will the oft-mooted takeover bid for ITV emerge after these strong figures, with a rosy outlook forecast? ITV is now valued at a heady £10bn so any bid would need to come in at £15bn, a taxing amount for all but the biggest players. Crozier may have made the company too big for its broadcast rivals to swallow, quite an achievement if that was his intention.

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