ITV Earnings Call: Kangaroo Swallowed £8 Million; 'We Can't Defy The Economy'

It’s a bad day to be ITV (LSE: ITV) exec chairman Michael Grade, COO John Cresswell or finance director Ian Griffiths. As ITV recorded a total £2.7 billion loss and said it want to sell Friends Reunited, Scoot and SDN and close ITV Local, they faced analysts in the broadcaster’s morning investors’ meeting. Grade started the Q&A by asking analysts to use a microphone “as we are webcasting or something”…

Kangaroo: ITV is writing down £8 million against the failed VOD JV – that’s £1 million operating costs as an exceptional charge and £4 million non-operational costs as a carrying value in 2008, plus £3 million operational exceptional costs in 2009.

Friends Reunited: A glum-sounding Grade said: “Friends Reunited has helped to put us on the online map but our focus on video content doesn’t play to its strengths.” Cresswell acknowledged that abandoning Friends’ paid subs model had hurt its sales, as had the general decline of “white-space” ie. display ads.

Online: Cresswell: “Our investment in is contained – the content comes from ITV1 and our digital channels at marginal costs … We will be scaling back our investment in mobile and gaming services.” video: Cresswell on cost-per-thousands: “The CPMs at the moment are very good. CPMs of £35 to £50. Video online is at the premium end of the marketplace. We could have cut the pricing but decided we’ve got a premium product and to hold it.” “Long-form viewing online has increased significantly this year, we’ve seen some drama being watched up to 600,000 times. We’re seeing a significant opportunity there for us.”

SDN: Cresswell: “We are reviewing our options from a position of real strength … (it’s) doubled its revenue.”

Recession: Cresswell: “We can’t defy the economic downturn.” Grade: “The economic downturn is beyond our control. We’re taking timely and effective action. We will get through to the other side and, when we do I’m certain we’ll be more strongly positioned thanks to the actions we’re setting out today.”

I certainly don’t need to tell anyone how much the economic context has changed over the last several months – the world is a very different place from the way it was at the start of 2008.” “We have consistently been ahead of the curve in anticipating and adapting to market changes.” “This is not indiscriminate cost cutting – we are making ITV a leaner and fitter business. It’s as much about changing the mix toward higher-ROI genres like entertainment.”

Digital TV: Grade took a contorted positive: “Digital take-up is beginning to level off – that means no more fragmentation year after year.

ITV/C4/Five super-merger?: Grade tried to scotch’s recent report that he tabled a radical merger in consultation with Digital Britain author Stephen Carter: “Nobody’s proposing anything of the kind. In the context of that debate, we put up a slide talking about consolidation and the possibilities – talking 10, 20 years ahead. That got characterised as ITV’s immediate plan. Nothing could be further from the truth – we haven’t proposed it, we won’t propose it, it’s not going to happen; it’s just part of the blue-sky thinking…”