Summary:

ITV (LSE: ITV) has set back its ambitious £150 million online revenue target from 2010 to 2012 after only creeping toward that goal since i…

imageITV (LSE: ITV) has set back its ambitious £150 million online revenue target from 2010 to 2012 after only creeping toward that goal since it was set last year. In today’s earnings, ITV online income grew to £17 million in the half-year to June – but that’s just £1 million more than a year ago, suggesting the broadcaster is still far short of the aim, set in September’s turnaround plan.

The goal always looked mightily ambitious, and progress to date had been slow, but the situation is now compounded by an advertising recession that no-one saw coming when the plan was drawn up. Exec chairman Michael Grade today: “Although this pushes back the previous target by two years, we expect to meet our revised online target without relying on substantial acquisitions.”

While ITV.com sales grew 40 percent to just £7 million in the last six months (those VOD updates finally bearing fruit, with 50 million video views), Friends Reunited – which actually pulled £22 million through 2007 – reported a £1 million sales loss this period to settle on £10 million, thanks to redesign costs and lost subscription revenue from the switch to ad support in May. Before interest, tax and amortisation, overall online losses widened to £8 million from £3 million a year ago, blamed on the ITV.com relaunch and ITVLocal.com nationwide roll-out.

The turnaround plan said at least 75 percent of this mythical £150 million online revenue would come from online display, video and local classified advertising, ie. the sector most at risk from the economic downturn. The rest would be from subscription services and pay-for content, which Friends Reunited has actually now abandoned.

The earnings say: “Failure to deliver new online propositions on a business to consumer model was also identified by ITV as a risk.” In fairness, it will only lose money from the Kangaroo JV this year – the Competition Commission review means it “cannot now launch in 2008 as originally planned”.

Release & Financials | Webcast (9.30am BST).

Mobile: ITV revealed it’s got Nokia’s (NYSE: NOK) agreement to preload its ITV Mobile service on a range of UK handsets later this year, offering both TV streaming and downloadable content.

Advertising: Grade warns ITV is “not immune to wider economic pressures” and forecasts ad revenue in the nine months to September will be down three percent.

Overall: Revenue is actually up 27 percent to £1.03 billion but earnings before tax, interest and amortisation fell nearly 20 percent to £717 million. The fundamental turnaround plan is now severely threatened. It assumed UK TV ad growth of 1.5 to two percent annually, but now in fact expects a three percent decrease for the first nine months alone, with the situation deteriorating. Michael Grade: “2008 is proving a tougher first year for the five-year turnaround strategy than anyone could have predicted a year ago.” On top of £41 million cuts this year and £40 million by next, ITV is today committing to further cuts of £35 million by 2010. It also cut the dividend today.

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