Earnings: ITV Net Profit Down 30 Percent; Maintains Focus On Digital

ITV, the largest commercial broadcaster in the UK, today reported that net profit had declined by more than 30 percent for H1 2007 compared to the same period last year, to £83 million ($168 million) from £120 million, and that revenue fell to £1.004 billion compared to £1.077 billion. But in a statement, ITV noted that the outlook was beginning to stabilize and emphasized growth in its digital business:

— ITV said revenue from interactive services were £19 million; chief executive Michael Grade noted that the company has been affected by the suspension of premium-rate telephone and interactive services pending a review by Deloitte in the wake of a scandal across several television stations over the issues of compliance and over-charging viewers.

— ITV says it has 8.5 million unique users across its Internet sites.

— Revenue from ITV’s social networking sites — Friends Reunited, Friends Reunited Dating and Genes Reunited — was up 38% over last year to £11 million.

— ITV notes that early signs for the pre-roll video advertising market were good: ads for Ford carried in Britain’s Got Talent online clips generating a click-through rate of 9 percent, a multiple it claims is 30 times the normal average click-through rates. Pre-roll ads run over catch-up, archive and made-for-broadband programs carried on its itv.com site, which is now relaunched as a streaming site.

— Further emphasis on new business growth: ITV appointed two new non-exec directors, Agnes Touraine and Heather Killen. Touraine is a founder of consultancy Act III and was formerly head of Vivendi Universal Publishing; Killen once worked for Yahoo and then co-founded Hemisphere Capital, a PE group. “Digital talent for the digital age,” in the words of Grade.

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— Advertising revenue for ITV1 fell by 9 percent (the channel accounts for 59 percent of the group’s revenues), to £595 from £654, but ITV projects that it will be up by 1 percent on a YOY basis for Q3, along with a 4 percent increase across all its analogue and digital channels. Digital channel revenue was up to £95 million, representing 36 percent growth. Audience decline is also beginning to slow, with individual viewing share year on year from January 1 to July 29 up 0.7 percent to 21.8 percent in homes with mulitchannel access.

— Grade is still actively involved in lobbying the government to mandate HD spectrum on the digital terretrial Freeview platform, which has yet to be decided although pay-TV operators are already planning HD services on their delivery networks.

— The group is in the process of conducting a business review and will update the market on 12 September.

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