ITV's healthy numbers prove that free to air network television is neither dead nor dying
Adam Crozier is a lucky general. ITV has dealt with none of its strategic challenges, but the ad market is bouncing back and pre-tax profits for 2010 are up over 11 times to �286m. In one sense this is hard to fault, but if you are judging ITV over the financial long haul, this is a business that compares terribly to BSkyB ? which earns nearly twice as much in a half year (�467m) as ITV manages over the entire 12 months.
Nevertheless, ITV's numbers prove one important point. Free to air network television is not dead, or dying as was feared two or three years ago. ITV's ad revenues were up 16% last year, up another 12% in the first quarter of 2011, and up 8% to 12% in April. Crozier may have to admit, as he did on Wednesday, that revenues are only back at 2006 levels ? but ITV has a stable, long term business. Remember all this has happened when there has been a recession on.
The television is better ? particularly the drama ? from Downton Abbey to Marchlands. The big shows are proving resilient ? from The X Factor to, er, Britain's Got Talent. And even the troubled Daybreak is stabilising. After years of decline, audience levels are beginning to level off ? ITV's share of viewing down just 0.2 percentage points at 22.9%. ITV's share of commercial viewing is at 39.8% among adults, off just 0.2 percentage points again. None of that is enough to turn around ITV's finances, but the programmes and audiences all show that ITV is viable and stable.
It is ? as it always was ? a promising base from which to build.
The rest, though, remains as uncertain as ever. ITV's results identified the same two key strategic weaknesses. ITV is not big enough online, which is where the growth has to be. Revenues from ITV.com are a relatively modest �28m, and the �4m growth is rounding error in the overall performance. The problem, though, for ITV is whether a broadcaster, particularly a free to air one, can actually build a substantial online business ? without developing some sort of subscription business. But it is probably way too late for ITV to become an internet service provider.
That leaves ITV Studios, the production business, whose rotten performance stood out. Revenues to other broadcasters were down �42m to �293m; profits were off �10m at �81m. ITV has failed again and again to sell many shows abroad (that the last was I'm A Celebrity reveals the paucity of the slate). Just under half its programming, and so much of its best stuff, comes from outside. And more worryingly still, as indies fall under the hammer to the likes of News Corp, NBC Universal and Time Warner, ITV is seeing creative value leach away from itself to the integrated US groups.
It is here something has to change. ITV has capital to play with for once, but Crozier pretended to be uninterested in Skins 'n' Shameless producer All3Media, when he probably needs some sort of greater creative scale. He talked about building an international network, but knows full well (however much we love The Killing) that most programme formats with global hit potential have come from Britain, the US and the Netherlands. Maybe ITV has been a bit of a victim of the terms of trade rules that have made the indies millionaires while ITV has lost share, but there's not a lot of point in moaning about that.
ITV may have stabilised under Crozier's short rule. But it has yet to prove it can develop and grow into an international creative force. A pity, really, he couldn't have bought Elisabeth Murdoch's Shine.
Source: http://www.guardian.co.uk/media/organgrinder/2011/mar/02/itv-adam-crozier-television
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