By Simon Zekaria
LONDON-- ITV PLC signaled the completion of a multiyear plan to
turn around its fortunes by returning hundreds of millions of
dollars to investors and recording a profit increase boosted by its
internationally growing production business.
ITV said in 2010 that it would generate half its revenue from
sources other than traditionally volatile television-advertising
breaks in five years through a push into digital media and the
selling of programs overseas.
ITV runs shows such as "Downton Abbey"--one of its most popular
programs, co-produced by Carnival Films, part of Comcast Corp.'s
NBCUniversal, and PBS's Masterpiece. But through ITV Studios--the
group's over-the-air broadcaster's production arm--ITV is spending
to create its own television shows, such as British drama "Mr.
Selfridge," for both its own channels and to sell to international
broadcasters.
ITV is also developing its U.S. production unit to win bigger
audiences. Over the past years, ITV has steadily acquired majority
stakes in reality-TV specialists to become the largest independent
producer of unscripted shows in the U.S.
Chief Executive Adam Crozier said the company is investing
millions of dollars into programming to keep an edge over rivals.
ITV is already spending over $1.8 billion on programming each year
and Mr. Crozier said it would spend a further GBP20 million ($31
million) in 2015.
Mr. Crozier said spending on programs is a "huge opportunity"
for ITV, given the rewards available in a global content market
worth $50 billion, which is growing up to 6% a year.
"Everyone is looking at content being the differentiator," said
Mr. Crozier. "We are growing very quickly and it is up to us to
keep producing high quality work."
Overall, ITV now has 141 programs on 45 networks in the U.S.
Still, despite the success of its shows in the U.S., Mr. Crozier
said there are currently no plans to launch a pay-television
channel stateside.
ITV, the U.K.'s biggest over-the-air commercial broadcaster, on
Wednesday recorded a 43% jump in profit. Net profit in the year to
Dec. 31 increased to GBP466 million ($715 million) from GBP326
million in the same period a year earlier. Revenue from external
sources rose 8% to GBP2.59 billion. Revenue at ITV Studios was up
9% to GBP933 million.
The group also said there accelerating domestic demand from
advertisers in the first quarter of 2015, even as its viewing
figures fell. It said advertising revenue is seen up 11% in the
first fiscal quarter. Advertising revenue was up 6% to GBP1.63
billion in 2014.
ITV, which has exclusive rights to show the Rugby World Cup
later this year, proposed a full-year dividend of 4.7 pence a
share, up 34% on the year, and a return to shareholders valued at
GBP250 million by a special dividend of 6.25 pence a share.
The London-headquartered group--in which U.S. cable giant
Liberty Global PLC paid over $800 million for a 6.4% stake last
year to further bolster its position in Europe--said it expects
another strong performance in 2015, with continued revenue growth
in all parts of the business. It expects ITV Studios to post about
GBP100 million of revenue growth on a constant currency basis.
At 1430 GMT, ITV was up 5.3% at 233.6 pence. ITV is ready for a
new phase and there are no signs of its growth slowing down, says
Hargreaves Lansdown analyst Keith Bowman.
"A more balanced business, less reliant on volatile advertising
revenues in the U.K. has been created, with the next phase of its
strategy now being pursued."
Write to Simon Zekaria at simon.zekaria@wsj.com
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