ITV disappoints with SOV but nine-month profits rise 8%
| 13 November 2014
The fiscal bounce that UK broadcaster ITV got from the football World Cup in the summer has not been matched by improvements in share of viewing according to its latest interim management statement.
ITVFor the nine months ended 30 September 2014, ITV posted total external revenues of £1.803 billion, a year-on-year rise of 8%, positioning the company to be confident of delivering double-digit profit growth for the full year. ITV had a total revenue of £2.041 billion, but took Internal supply cost of £238 million.
Looking at specific divisions, ITV Broadcast & Online revenues were up 7% compared with the same period of 2013 to £1.432 billion driven by 6% growth in NAR and continued strong growth in Online, Pay & Interactive which was up 24%. Boosted by acquisitions, particularly in the US, ITV Studios showed revenues rising 10% year-on-year to £699 million. Non-NAR revenues were up 9% to £886 million. For the full year, ITV expects its total family NAR is set to be up around 5%, significantly ahead of the market.
Commenting on the results, which he admitted contained disappointing aspects, CEO Adam Crozier said: "We've made further strong progress in growing all parts of ITV ... We've expanded our broadcast family of channels with the launch of two new channels, ITVBe and ITV Encore, our first pay channel. ITVBe, which made its debut in October ... While ITV Family share of viewing (SOV) is not as good as we would like, we remain clearly focused on improving onscreen performance and we expect to outperform the advertising market again next year.
"We anticipate continued revenue growth right across the company. We expect studios to grow revenue by a similar amount to this year driven by the full year benefit of our acquisitions and a return to organic growth fuelled by the global demand for high quality content ... Our broadcast business will benefit from our on-going creative investment including a full year of our two new channels and the positive economic and advertising outlook. In 2015 we will focus on improving SOV and we have a strong programme schedule. online, pay and interactive is again expected to show double digit growth helped by ITV Encore and the continued demand for VOD advertising."
The results have already received guarded responses from the UK financial community. Describing the Q3 interim update as "steady as she goes", Ken Odeluga, market analyst at cityindex.co.uk, said: "Without the simmering bid interest from US cable giant Liberty Media (of which ITV says nothing today) the stock is largely one for long-term investors. They will not be disappointed the basic cash streams ... And the key television metrics are also trending in the right direction. If achieved, the complete-year revenue rise would be well ahead of the average for the UK TV market. This is all well, good and sound, however as can be seen, the only figures which scream of surging growth are the digital ones, and these as yet, are not a core operational focus. CEO Adam Crozier made it clear his priorities this year centre on continuing to right-the-ship, whilst laying the ground work for growth."