ITV profits tank, but its online TV service still booms
ITV one of the big UK TV networks have seen massive profit losses. Is it due to the Internet TV boom?
Well partly yes, the fact that viewing habits have changed and the availability of content is now so massive has had an effect on audience figures and advertising revenue.
The network are planning to cut 600 jobs from its staff of 4,500, reduce by £65m, its program budget and also plans to sell its website venture, Friends Reunited as it revealed a pre tax profit loss of 41% in 2008. Advertising is down by around 17% for the first quarter of 2009.
The company say it intends to make efficiency savings in its business of £50m this year and £70m next year. With savings to be made in “central services and across ITV studios operations outside the London area”.
ITV chief Michael Grade said that the advertising market was “the most challenging I have experienced in over 30 years in UK broadcasting”. “Our priorities have to be aligned to the changed economic context. The board therefore recognises that the 2012 revenue targets set in 2007 are no longer appropriate and we are focusing on our core business as a producer-broadcaster, on reducing our costs and on cash generation.”
ITV’s network programme budget of £1bn will be cut back by £65m this year, held flat next year and cut a further £70m in 2011.
The company will also sell its social networking website Friends Reunited and online business directory Scoot. Also scaling back on regional web TV service ITV Local.
ITV reported a 41% drop in adjusted pre-tax profits to £167m last year and a 32% drop in earnings before interest, tax and amortisation to £211m. The broadcaster’s overall loss was £2.7bn including a goodwill impairment charge of £1.6bn recognised at half year and a further £1.09bn recorded in the full year due to a deterioration of the markets.
Even its website ventures have been tanking with a rise in losses from £12m in 2007 to £20m last year. ITV said this was due to a fall in profits at Friends Reunited, investment in itv.com and costs relating to the closure of Kangaroo, the online TV venture with Channel 4 and BBC Worldwide.
However on a brighter side, revenue from its online streaming catch up tv service increased by 9% to £36m.
So there you have it networks, concentrate on internet tv and start making hay.
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