28th Jul 2015 11:34
LONDON (Alliance News) - ITV PLC Tuesday maintained its outlook for 2015, continuing to expect "another strong performance with revenue growth across the business", as it posted a rise in pretax profit for its first half and forecast a strong third quarter for net advertising revenue.
The FTSE 100-listed broadcaster posted a pretax profit of GBP327 million for the half year to end-June, up from GBP250 million a year before, as revenue rose to GBP1.36 billion from GBP1.23 billion. Revenue growth was boosted by a strong performance from its ITV Studios business, and 6% revenue growth in its Broadcast & Online segment.
Adjusted to strip out amortisation, impairment, and acquisition related costs, the company posted a pretax profit of GBP391 million, up from GBP312 million, and earnings per share of 7.7 pence, up from 6.1 pence.
Net advertising revenue for its core channels in the first half was GBP838 million, up 5% from GBP795 million a year before, as 12% growth in the first quarter was offset by a flat second quarter. These core channels consist of ITV, ITV2, ITV3, ITV4, CITV, ITV Breakfast, CITV Breakfast and all associated time delayed and high-definition channels, grouped together as 'ITV Family'.
It expects net advertising revenue for ITV Family to be up around 8% in its third quarter, and up 6% in the nine months to end-September. For the whole year it expects to outperform the market over the full year.
The company saw revenue from its ITV Studios arm, ITV's television production arm, rise to GBP496 million form GBP402 million, driven by acquisitions the company has made during the period. ITV has been snapping up a number of production companies, completing four acquisitions in the first half of the year including 'The Voice' creator Talpa Media, and 'Poldark' producer Mammoth Screen.
ITV said its ITV Studios business is "on track to deliver strong revenue growth over the full year, with good organic growth and acquisitions coming through as planned.
In the first half share of viewing for ITV Family was down 4%, which the company attributed to a decline at its main ITV channel, which partly offset an improvement across its digital channels. The channels were hit by strong competition from the BBC, no major sporting event taking place and some shows not performing as well as expected.
The company has been suffering from slipping ratings in recent quarters and after seeing growth in 2013, share of viewing fell to 22.0% from 23.1% in 2014, despite a boost from the World Cup. On a call with journalists, Chief Executive Adam Crozier cited a few areas in which ITV has seen issues in ratings, including daytime television and sports.
Improving share of viewing "remains a key focus", the company said. It expects to see improvements in share of viewing in its second half as a result of the Rugby World Cup and new shows.
Crozier detailed the ways in which the company is addressing the fall in ratings, such as increasing investment in drama series, launching new entertainment shows like 'Ninja Warrior', improving existing shows like 'Good Morning Britain', and revamping and improving its "big hitters", including the new line up of judges for 'X-Factor' along with some format changes that have not been announced.
Ratings for its major soap operas Coronation Street and Emmerdale have also fallen, and ITV is investing in these shows. The company has also secured the UK broadcasting rights for Seth MacFarlane's family of popular animated shows, including 'Family Guy' and 'American Dad'
ITV is able to fund this investment from the costs it has saved from the Champions League. It lost the rights to broadcast the Champions League from 2015 to BT Group PLC. Crozier noted the underperformance of Champion's League as a contributing factor to falling share of viewing in sports, indicating that audiences have been dwindling as English clubs have not been doing as well.
ITV is no longer reporting the share of broadcast for ITV Family with its interim results as a result of this being "increasingly difficult to measure", with all broadcasters having different definitions. Based on its current estimates it believes ITV is slightly behind the market at its half year, but expects to be ahead of the market over the full year as a result of deals it has done.
When questioned on the UK government's consultation paper into the future of the BBC, Crozier said that ITV's stance had not changed, and suggested that the issues surrounding the public broadcaster are about appropriate funding, better governance, a more efficient organisation, and learning to act as "more of an enabler and parter" to the commercial sector.
"Looking ahead to 2016 we have now secured the joint rights to Six Nations Rugby to add to our strong schedule of sport, drama and entertainment including the European Football Championships, Beowulf, Britain's Got Talent and Seth MacFarlane's Family Guy and American Dad. Our outlook for the remainder of this year is unchanged and we expect to deliver another strong performance in 2015," said Crozier in a statement.
ITV proposed an interim dividend of 1.9 pence, up from 1.4 pence a year before.
Numis has retained its Add recommendation for the company and has raised its price target for ITV to 300 pence from 290 pence.
The results came in ahead of Numis expectations, and as a result the broker has raised its forecasts for the company. It lifted its pretax profit expectations for 2015 by 2% to GBP830 million from GBP815 million, and its earnings per share forecast to 15.9 pence from 15.6p. This is ahead of consensus which is 15.8p.
In 2014, ITV posted pretax profit of GBP605 million and earnings per share of 11.6p.
Shares in ITV are trading up 2.1% at 269.30 pence Tuesday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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