Income from in-house content such as the popular costume drama Downton Abbey helped to lift annual pre-tax profits at ITV by 14 per cent, even as the broadcaster warned of a slowdown in advertising.
The UK’s largest free-to-air commercial broadcaster by turnover said it expected a 2 per cent fall in advertising revenues in the current quarter due to tighter marketing budgets, following a 1 per cent increase in advertising revenues in 2011.
The success of Downton Abbey and recently signed content deals with the likes of Sky, Netflix and Lovefilm helped boost revenues from the studio and online businesses. Shares in ITV closed up by 5.45p, or nearly 7 per cent, at 85.95p.
“The increase in non-advertising revenues of £93m (up 11 per cent year-on-year), driven by our studios and online businesses, is clear evidence of progress in rebalancing the company and our ability to grow new revenue streams,” said Adam Crozier, ITV chief executive.
Mr Crozier, who joined ITV in 2010 after a long and chaotic search for a successor to Michael Grade, last year committed to invest £25m to develop ITV’s online content and digital channels. The move is part of the broadcaster’s effort to reduce its reliance on advertising in the face of competition from areas such as online news and internet-based television.
He said advertising revenues towards the end of 2011 were hindered by a poor Champions League football draw for English clubs and the warmer winter weather.
“We had a slightly disappointing last quarter – X-Factor was a bit down …Coronation Street was slightly down compared with the 50th anniversary last year, and there wasn’t enough snow,” he said, adding: “Not surprisingly in bad weather people watch a lot more television.”
Overall, annual revenues rose by 4 per cent year-on-year to £2.1bn and pre-tax profits rose from £286m to £327m.
“ITV’s full-year figures look good overall and the outlook is better than we feared, which should provide some fuel for the bulls,” said Steve Liechti at Investec. “However, all is not good news – new multi-platform initiatives sound late, and online growth is still relatively modest.”
The results came as Mr Crozier unveiled Mr Selfridge, its next big drama project, which is billed as a tale of sex, class and retailing in Edwardian London and is based on the life of Harry Gordon Selfridge, and his endeavours to build the UK’s first department store, which still bears his name.
ITV hopes that the 10-part series, which is due to be released next year, will repeat Downton Abbey’s global success and underpin the group’s strategy of boosting in-house programming power.
Diluted earnings per share fell from 6.6p to 6.2p, and the broadcaster restored its final dividend for the first time since 2008, proposing to pay 1.2p and bringing the total for the year to 1.6p.
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