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Downton and digital boost ITV

Last updated: 19:30 29 Feb 2012 AEDT, First published: 20:30 29 Feb 2012 AEDT

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Downton Abbey series maker ITV (LON:ITV) said a surge in digital channel viewers helped revenues and profit growth beat expectations last year.

Underlying profits rose by 23 percent to £398 million, driven by non-advertising revenues. Pre-tax profits rose by 14 per cent to £327 milion.

ITV attributed the improvement to a 10 percent increase in the viewing figures of its digital channels while the advertising market flat-lined.

Ad revenues rose by one percent, but ITV did warn of a two percent fall in the first three months of this year.

ITV is the middle of a five year transformation plan instigated by chief executive Adam Crozier, who joined in 2010 with a remit to turn the broadcaster’s fortunes around.

Two years in, Crozier says the plan is ahead of schedule with cost savings £5 million more than predicted and totalling £20 million.

Another part of the plan was to rebuild investment in ITV’s programmes and in the year just ended £28 million went into the production side at ITV Studios as well as its online services and digital channels.

In addition, the number of new programmes commissioned rose by 28 per cent driven by the continuing success of period drama Downton Abbey and music talent show The X-Factor.

Crozier said: “The increase in non-advertising revenues of £93m, driven by our studios and online businesses, is clear evidence of progress in rebalancing the company and our ability to grow new revenue streams.”

However, ITV1, the company’s flagship channel, saw viewing figures dip two percent, despite the launch of ITV+1.

ITV has high hopes for its new period drama Titanic which has already sold to 45 other countries, to help boost viewing figures.

Today’s news saw the shares jump 8% to 87 pence.

Broker Credit Suisse raised its target price to 100p and its forecast for earnings per share by 12 percent on the back of the figures. 

 “Despite the 24 percent rally in the stock price over the last three months, on our upgraded forecasts ITV is the cheapest broadcaster in Europe,” the broker said. “We believe it deserves a higher rating.”


 

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