ITV unveils pay-TV strategy

ITV has agreed a pay-television deal with BSkyB to launch high definition versions of its digital channels on Sky’s platform, as part of a five year “transformation plan”.

The Xtra Factor's Holly Willaby
The Xtra Factor’s Holly Willaby

The ITV channels ITV2 HD, ITV3 HD and ITV4 HD will launch as part of Sky’s HD subscription package of channels in the autumn. The first HD channel to launch will be ITV2 HD in time for the start of The Xtra Factor in October. The other ITV HD channels will launch shortly after.

The deal with Sky is part of a strategy to help ITV become less reliant on traditional advertising revenue, despite a robust set of interim results that showed net ad revenue up 18% ahead of the market. The launch of pay TV channels by ITV had been widely signalled.

Crozier says of the strategy: “Building new revenue streams by exploiting our content across multiple platforms is a key part of the ITV Transformation Plan.”

He adds: “Over the last 10 years the global television market has changed beyond recognition. Audiences continue to fragment with vastly increasing viewer choice and there has been little or no real growth in UK television advertising over the last ten years.

“By contrast pay TV subscription services continue to grow and in ITV’s other key area of operation – content production – the market has become increasingly globalised. Many of the big winners are global format owners and US studio dramas… but ITV itself is not currently fit to compete in the changed
environment.”

He adds that historically ITV has been weak on technology with no clear platform strategy and a poor website offering.

ITV’s plan is now based on by four strategic objectives: these include creating a “fit for purpose” organisation; securing maximum audience share and revenue from the free-to-air broadcast business, exploiting programming content across multiple platforms and building a stronger and more international content business

The first half year figures released under the management team of chairman Archie Norman and chief executive Adam Crozier, show adjusted pre-tax profit of £118m, compared with a loss of £4m for the same period last year.

Group revenue jumped from £909m to £987m, year on year.

Share of commercial impacts (SOCI) remained flat overall with ITV1’s figure down 4% to 27.2% but the aggregated SOCI of its digital channels increased by 15% from 9.2%.

Excluding Friends Reunited, which was sold off, ITV’s online revenues rose 20% to £12m but ITV says: “”the online business remains subscale given the size of the online video market.”

The company is forecasting ad revenue of 15% for the third quarter.

Commenting on the results Bob Wootton of advertiser body ISBA says: “ITV’s increasing revenues have been greatly helped by a better second quarter but are in no small part also down to the broadcaster having sharpened its operation.

“There are now good early signs of ITV regaining its performance strength and this is exactly what advertisers want, particularly when ITV says it will plough some of its profit back into content.”

The broadcaster still has several senior roles to fill, including the marketing director position after the departure of group marketing director David Pemsel.

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