Adam Crozier’s first reporting of results as chief executive of ITV on Tuesday will be accompanied by signs of a pay-TV deal with British Sky Broadcasting and an aggressive approach to making money online, according to people close to the company.
If discussions that centre on BSkyB paying ITV for the exclusive right to host high-definition versions of ITV2, ITV3 and ITV4 bear fruit, it would give the UK’s largest commercial broadcaster a foothold in pay-TV that Mr Crozier and his chairman Archie Norman have identified as crucial to its future.
People familiar with the strategy said that ITV is also interested in buying Virgin Media’s 50 per cent stake in UKTV, a pay-TV business run as a joint venture with the BBC’s commercial arm, which had profits of £27.2m in the first six months of 2010.
Its online strategy, which stumbled under the management of Michael Grade from 2007 to the end of last year, will be driven by the appointment of Paul Dale as chief technology officer reporting directly to Mr Crozier.
ITV declined to comment on the contents of Mr Crozier’s strategy review, conclusions of which he will present to investors and markets at the same time as half-year results.
He will at least have a solid platform on which to begin the construction of ITV’s future. Advertising revenues have bounced back strongly this year and ITV’s screening of the football World Cup, which no other commercial broadcaster had rights to, has helped it outperform a UK market that analysts expect to show a 10 per cent increase in 2010.
On the basis of a 17 per cent rise in advertising sales for ITV in the first half of the year, Paul Gooden, analyst at RBS, is expecting Mr Crozier to announce that total revenue rose 9 per cent to £995m and operating profit increased to £156m compared with just £46m a year ago.
Those profits would be some £50m ahead of management’s last guidance and, taken together with £70m of savings already identified for next year, prompt Mr Gooden to forecast a £120m increase in programming spending available to Peter Fincham, ITV’s director of television.
Both Mr Norman and Mr Crozier have identified improving the quality of ITV’s in-house productions as another critical factor in assuring its long-term future and, following analysis by LEK Consulting, has set up three operational boards within the company, one under Mr Fincham, one working with the programme-making ITV Studios division under Kevin Lygo and a third, the so-called total value group, working between the two on ways to both create and exploit television formats.
Marketing and audience research have been put under Mr Fincham, another person close to the company said, in an effort to tie programme commissioning more tightly to both what viewers say they want and the broad strategic branding aims of ITV as a whole.
Mathew Horsman, of the consultancy Mediatique, said: “An exclusive HD deal with BSkyB for ITV’s digital channels makes good sense, at least on a two- or three-year basis and would provide single-digit millions in revenue for ITV.
“ITV’s relationship with Sky is far better now than it was under Michael Grade.”
He added that he would be “very surprised” if ITV did not look at buying Virgin Media’s share of UKTV, even though the joint venture’s recent deal with Channel 4 to sell advertising on its airtime had reduced the potential synergies. “It would mean UKTV could become, with BBC and ITV programmes together, a best of British offer and, through BBC Worldwide’s international links, give a conduit for ITV to improve their sales abroad.”
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