ITV returns to profit

Forecasts revival of advertising revenues

LONDON -- "Britain's Got Talent" and "X Factor" broadcaster ITV returned to the black Wednesday, posting pre-tax profits of £25 million ($38 million) for the 12 months to December 2009, compared to writedowns that left it £2.7 billion ($4 billion) in the red the previous financial year.

Revenue for the period declined 7% to £2 billion ($3 billion), with overall television revenues down 9% at £1.3 billion ($1.9 billion) and revenues at ITV's production business ITV Studios down 4% at £597 million ($898 million), despite a boost in currency terms from the weaker value of the pound.

The broadcaster forecast that the worst of a torrid advertising downturn was over, pointing to advertising revenue increases of 18% in March, 15% in April and overall TV advertising revenues predicted to be up 7% in the first quarter of the year.

But incoming chairman Archie Norman was frank about the state of the challenge.

"This time last year the declines were 21% in March and 20% in April so the bounceback has to be seen in that context. It is not growth on a two-year basis at all."

Norman, who is managing the ship until newly appointed CEO Adam Crozier takes the reigns April 27, said the management were taking a three to five year horizon to reposition ITV's operations and was evaluating the current business under a wholesale strategic view.

"This is very much year zero. If we do things just to maximize next year's profits we won't have transformed the business in the proper way. The right decisions are based on looking three to five years ahead," Norman said, speaking on a conference call.

Much of the focus of the strategic review will be on reworking operations at ITV Studios, the production arm headed by former Fox business affairs executive Lee Bartlett, which suffered fewer commissions as both the ITV network and other broadcasters slashed their production budgets over the period. Norman has ruled out selling off the division and declined to give guidance on specific changes to the production business, but he indicated that changes were long overdue.

"Are we satisfied with the shape of ITV Studios, no we're not -- that's not a criticism of the team in charge -- it's a reflection of how important content production and rights ownership is to us," said Norman. The international business depends on the feedstock of content development in the U.K."
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