ITV Eyes U.K. SVOD Service, Content Unit Won't Make "Significant" U.S. Scripted Acquisitions

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CEO Carolyn McCall speaks out on an earnings conference call after the U.K. TV giant unveils a strategy refresh, including a focus on its direct-to-consumer business.

U.K. TV giant ITV sees "an opportunity to build a subscriber video-on-demand service, so a streaming service, in the U.K. on the back of our brand, our content and significant cross-promotion capability," CEO Carolyn McCall said on Wednesday.

She also said the ITV Studios production arm would continue to look for potential acquisitions that promise a strong financial return. "We are going to continue to grow organically, and we will look at M&A … in a very disciplined way and a return-focused way," she said.

Outgoing ITV COO and CFO Ian Griffiths said there likely wouldn't be any takeover of a big U.S. scripted content producer though. "We're also looking at investing in U.S. scripted," he said. "One of the things we’re ruling out is a significant M&A investment in U.S. scripted."

He didn't detail what kind of price tags ITV would consider "significant." But Griffiths did mention the success of such U.S. deals as ITV Studios' joint venture with Marty Adelstein's Tomorrow Studios, which is behind TNT hit Snowpiercer, which Netflix picked up this week for international markets.

McCall on Wednesday didn't comment on ITV's interest in Endemol Shine, the production powerhouse behind such hits as Big Brother, Masterchef and Black Mirror, that current owners 21st Century Fox and Apollo Group recently put up for sale. "We don’t comment on specific opportunities," she said.

"Our research has shown that U.K. consumers are willing to pay for high-quality British TV that they can watch on their terms ... without ads," she explained about the U.K. streaming service plans during an earnings conference call after the company reported earnings for the first half of the year amid advertising growth and a gain at the ITV Studios production arm.

"There is a real demand for British, distinctive content: 92 of 100 top programs [in the U.K.] are British programs," she added later when asked about the opportunity. "There is a bit of a gap and a bit of a window. We have a strategic intention to do something more in this area."

The comments came after ITV unveiled a strategic refresh that includes plans to grow its direct-to-consumer business. 

Digital services are already a growing part of the company's business. ITV Hub is the company's online video-on-demand service, which also has a subscription-based advertising-free service that people can also use in continental Europe when on holiday, for example. McCall said Wednesday that this option has seen huge growth this summer thanks to such programming as the World Cup and hit reality show Love Island. But a new SVOD service would go beyond what this service offers. In North America, ITV also operates SVOD service Britbox with the BBC and AMC Networks, which offers British content.

McCall didn't give any guidance on when a U.K. SVOD service may be unveiled, but said the company was talking to "a range of different potential partners."

How many subscriptions are people willing to have? "What is fascinating in this market is how many subscriptions everybody is prepared to take," she responded, mentioning she has Spotify and Apple Music in her family, for example. "People are willing to pay for what they want and when they want it for convenience."