ITV profits rise 42% despite declining ad revenue

by Sam Matthews, Brand Republic 08-Mar-06, 09:00

LONDON – ITV has posted full-year results slightly ahead of expectations with operating profit up 42% to £460m, despite a drop of £50m in advertising revenue from its flagship ITV1 channel last year.

ITV said ad revenues fell 3.3% to £1.46bn at its core ITV1 channel, although this was offset by strong growth at ITV2, ITV3 and ITV4, which pushed total advertising revenues up 2.7%. ITV said it lost £50m in ad revenue from ITV1 compared with 2004.

Buoyed by a lower licence fee payment to the government last year, revenues were up 6% to £2.18bn. In addition, ITV announced it had halved its pension fund deficit from £672m in 2004 to £325m in 2005.

However, ITV warned that total ad revenues were expected to decline about 10% in the first quarter, blaming the timing of the World Cup and Easter, which of both fall in the second quarter of 2006.

ITV's shares were up 2.5% at 113.5p on the news this morning, partly helped by the announcement of a £200m, four-year ad deal with Unilever.

Charles Allen, chief executive of ITV, said the results were "another very successful" year for the network.

"We have strong cash flow, which has allowed us to invest in our businesses, improve the pension position and still be able to return cash to our shareholders.

"We have transformed ITV from an analogue, single-channel federation to a multi-channel, multi-platform, content-driven business firmly focused on the needs of viewers and advertisers," he said.

ITV also revealed its participation TV channel, ITV Play, will be launching in April. The new channel, which has been trialling in night time across ITV, will feature gaming, betting and dating programming with mobile and broadband spin-offs.

The network said ITV Play would be of "higher quality with higher production values and higher and more regular prizes".

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