ITV has reported strong revenue growth in all parts of the business, including a six per cent growth in net advertising revenue; total external revenue up eight per cent to £2,590 million; and ITV Studios revenue up 9 per cent to £933 million. Online, pay and interactive revenue was also up, increasing by 30 per cent to £153 million. Adam Crozier, chief executive at ITV, said the company had “maintained our emphasis on cash generation, cost control and improving margins as we continued to strengthen ITV creatively, commercially and financially.”
The ITV Studios increase in revenue was down to ITV’s acquisitions, Crozier asserted. ITV Studios made three international acquisitions in 2014 and it seems this trend is continuing into 2015, as it was reported on Monday that the company is in talks to buy Dutch company Talpa Media. ITV Studios’ earnings were up 22 per cent to £162 million, from £133 million in 2013. Almost half the total revenue of this area of the company came from outside the UK.
ITV launched two new channels last year, the pay-only ITV Encore and free-to-air ITVBe, designed to target a female audience. The company’s broadcast business saw profits up by 17 per cent, and a continued strong growth in video on demand, up 26 per cent. Crozier stated that ITV had “improved the quality and distribution of ITV Player, which is available on more platforms than ever before”, and that the company is “well placed to take advantage of the growth in viewing on connected TVs, including through our investments in YouView, Freeview Play and Freesat.”
However, ITV’s share of viewing on linear TV was down in 2014. ITV family share of vieweing declined 5 per cent in 2014, which ITV put down to a 4 per cent decline in the ITV main channel share of viewing. Despite benefitting from the World Cup last summer, ITV’s main channel faced strong competition from BBC. ITV2 also faced competition from new UK digital channels which launched in 2014, resulting in a decline in viewing figures. Crozier said that ITV is now “firmly focused on improving viewing this year”, citing new dramas including Jekyll & Hyde, Home Fires, Arthur & George, The Trials of Jimmy Rose, The Forgotten and Safe House as well as the return of Doc Martin, Prey, Downton Abbey and Vera. The channel also has exclusive rights to the Rugby World Cup which takes place in the UK this autumn.
Looking ahead, ITV Studios hopes to deliver around £100 million revenue growth on a constant currency basis in 2015. ITV also reported that its board has committed to grow the full year ordinary dividend by at least 20 per cent per annum for three years to 2016, achieving a dividend cover of between 2.0 and 2.5 times adjusted earnings per share. In line with this policy, the Board is proposing a final dividend for 2014 of 3.3p, which equates to a full year dividend of 4.7p (2013: 3.5p), up 34 per cent.
Crozier concluded: “ITV is now a high growth business with increasing emphasis on international content creation and distribution, and is demonstrably much stronger, both creatively and financially, than when we set out on our five year plan.”