ITV Announces Move into Pay TV

LONDON: Reporting its 2010 interim results today, British broadcaster ITV announced its expansion into the pay-TV business, with plans to launch three HD networks on Sky.

ITV will make ITV2 HD, ITV3 HD and ITV4 HD available as pay channels on Sky, as it works to increase its non-advertising revenues. Meanwhile, net ad revenues were up by 18 percent in the first half, to £728 million, with an improved EBITA of £165 million and a pre-tax profit of £97 million, as compared with a loss in the same period in 2009.

“The good financial performance we have reported today has enabled us to reduce our debt significantly but does not disguise the underlying challenges we face," said Adam Crozier, chief executive of ITV plc. "We are under no illusion that ITV needs to change substantially. For the past decade ITV has not faced up to the challenges presented by the rise of Internet-based platforms, the continuing growth of pay TV and subscription services and the globalization of content. Re-shaping the economics of ITV will require changes not only to the strategy but also to ITV’s management, culture and organization and to deliver this we are today announcing a five year Transformation Plan."

Crozier continued: "Our priority for the next 18 months is to make ITV a creatively dynamic and fit for purpose organization while maintaining strict financial controls. We have made swift progress in putting together a very strong management team fully focused on delivering a lean ITV that can create world class content, executed across multiple platforms and sold around the world. Over time we expect to move to a position whereby half of ITV’s revenue base will be derived from non-television advertising sources."

Part of its strategy going forward is strict cost controls—programming budget at ITV1 will be kept below £800 million in 2011 and 2012. However, ITV has created a £75 million fund to invest online, in content and in digital channels over the next three years. ITV has also announced plans for an ITV1+1 time-shifted channel, which will launch January 2011.