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Earnings: ITV.com Propped Up By Friends; Profit Drops 35 Percent

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ITV (LSE: ITV) grew online revenue 43 percent to £33 million through 2007. But two thirds of that is from subscription network Friends Reunited (up 36 percent to £22 million)… ITV.com, on which it has pinned so many hopes following a redesign, pulled in £11 million (up 57 percent) and got six million monthly users (BBC.co.uk got 19.1 million in January). The broadcaster’s pre-tax profits slumped 35 percent to £188 million overall.

September’s turnaround plan in part aimed to triple online revenue to £150 million by 2010. ITV said the plan is on track though, with two years to go, the task seems a tough one. And now ITV is planning “reduced emphasis on subscription fees” for Friends Reunited, removing some of the revenue streams that have made it so surprisingly effective despite more modern social nets. It pulled in £22 million (up 36 percent) and got two million more subscribers, taking it up to 19 million.

Broadband investment saw the online bottom line swing from a £1 million profit to a £12 million loss. ITVLocal.com got 750,000 unique users in December, following its nationwide completion in October; around 70 percent of visitors come to get news online ahead of local TV bulletins. The service is described as filling local gaps because “terrestrial television has always faced limitations in delivering at the sub-regional and local levels with multiple unresolved boundary issues stretching back over decades”. But it’s this boundary system on which ITV was founded and one wonders whether ITVLocal.com is really yet making the best of itself.

The company is now looking to sell its stake in broadband soccer services operated by Liverpool FC and Arsenal FC. Indeed, one report has it ITV has already sold the 50 percent Liverpool stake in a move that will reap nearly £20 million.

Revenue from the main ITV 1 fell four percent to £1.22 billion – a smaller fall than last year – and the broadcaster expects channel-wide ad revenue to grow 1.9 percent in Q1, bucking the TV sector trend. After the nightmare of the TV phone-in scandals, which led ITV to close its ITV Play channel, premium-rate phone-in revenue tanked £58 million, admitting “we let our viewers down and that is inexcusable”. £18 million in fines is chalked up as an exceptional item. Global content revenue collapsed to the tune of £37 million, though profit climbed two percent.

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In ’08, ITV can look forward to its involvement in Project Kangaroo, its Freesat JV with the BBC, plus two reviews of public service broadcasting and one review of rules that tie the amount it can charge for ads to its declining audience size.

In the call, ITV said it would shortly be “improving the user interface” for ITV.com, which was completely redesigned last year. Friends Reunited’s rebirth will include “greater emphasis on advertiser funding”. “The launch of the BBC iPlayer shows the scale of the potential market.” “We’ve delivered 38 million videos since August, with 42 percent of these accounted for by long-form programming.” Kangaroo costs will come from the £15 million total broadband investment already set out for ’08.

One Response to “Earnings: ITV.com Propped Up By Friends; Profit Drops 35 Percent”

  1. What makes ITVLocal even more baffling is that – while it supposedly plugs the gaps and sorts out the problems caused by the old federal map of ITV regions – it's based on the old ITV regions. So where I live, for example, instead of having access to ITV Milton Keynes, or even ITV Buckinghamshire, you're lumped in with ITV Anglia, a region into which we've been arbitrarily placed in the first place.

    It makes even less sense for them to be building the site around the on-screen regions when – with the exception of the odd news bulletin – the network has long since abandoned a regional identity in favour of a cohesive national one. Having spent the last ten years trying to get people to think "ITV" and not "Meridian" or "Central", isn't it a bit foolish to suddenly try and use those brands for an online offering?