ITV talks up rugby’s appeal over football to advertisers as its profits rise 25%

Despite its pre-tax profits increasing by 25% to £391m, ITV saw viewing figures fall by 4% in the first half of 2015. However its chief executive Adam Crozier insisted the commercial channel was continuing to deliver an “unparalleled deal” for advertisers and that the Rugby World Cup would help ITV to “outperform the market” in the second half of the year.

Crozier said the fall in viewing figures had not impacted ITV’s commercial performance, with total revenues rising across the business by 11% year on year to £1.36bn.

He said ad revenues were up 11.5% in the first quarter and down 0.5% in the second quarter. The latter was driven by declines in ‘Entertainment & Leisure’ ad spend as brands spent less following major investment during the Football World Cup last year.

Crozier predicted that ad sales would be up by 8% over the third quarter and total advertising growth would accelerate to 6% for the nine months to September.

Advertiser’s “ability to reach mass audiences” through ITV is “stronger than ever” according to Crozier, who said that all of its main shows delivered audience levels of more than 6 million.

Rugby’s impact on the brand

ITV, which recently lost out on Champions League coverage to BT Sport, is now “more disciplined” in what it’s prepared to pay for sport according to Crozier.

In a presentation to analysts this morning (28 July), he explained: “Champions League viewing figures have performed less well over the last two years and that’s been down to unattractive group matches and the failure of the English teams.

“We’re confident that through our acquisitions of the Rugby World Cup and the Six Nations we are providing advertisers with a very attractive platform to a vast ABC1 audience of men. The key to the rugby [in comparison to the Champions League] is we know the quality of the games we are getting and they are scheduled at good times.”

To address a fall in viewing figures, Crozier said ITV was committed to improving the quality of its two flagship soaps, Emmerdale and Coronation Street (which both suffered respective viewer declines of 2% and 4%) and would be investing in them through new characters and more live episodes.

ITV will also revamp its “underperforming” factual and daytime TV offers with the money saved from the Champions League deal. Although Crozier was keen to point out that Good Morning Britain saw viewing figures rise 7.5% over the first half of 2015.

Strong performance outside of TV

Another strong area for ITV has been its non-TV advertising revenue, which was up 18%.

Crozier said the ITV player, its VOD service, now has over 10 million registered viewers and was providing a “rich source of marketing data.” Video on demand ad revenues were up 20%, and the ITV chief executive said growing its online video advertising was a “key priority”.

ITV Studios also reported organic growth of 8% in the first half of the year, accounting for 21% of the company’s earnings before interest, taxation, depreciation and amortisation. ITV will continue to act as “a consolidator”, said Crozier, as it looks to buy production companies following its recent purchases of Talpa Media and Twofour Group. This is part of a wider five-year strategy for ITV to own more of its content in order to sell on to international markets.

ITV’s group finance director Ian Griffiths added: “I think the power of TV as a platform is evidence in the ad spend we are seeing from Google and Facebook.

“We feel we were slightly behind in the first half of the year on ad spend but we are confident will be ahead of the market for the full year and that will be driven by the rugby.”