ITV returns to profitability

I’ve watched ITV’s ‘inevitable’ decline over the last few years with considerable interest, from a Business Studies perspective. What factors are behind its bounce back into profitability? A handy BBC video clip takes us through some key points.

ITV is moving into pay-TV after agreeing a deal to launch high definition versions of the ITV2, ITV3 and ITV4 channels on Sky. The move is part of an overall strategy to increase revenues from non-television advertising sources. ITV, which was hit by a slump in advertising in the recession, said that advertising revenues were up 18% on the first half of 2009. June was a particularly strong month with the World Cup attracting additional advertising.

Now ITV’s chief executive is quoted by the BBC as saying, “We expect to move to a position whereby around half of our revenue base is derived from non-television advertising sources. Pay television has seen continual growth over the last decade and this deal is a great example of how a new, subscription-based launch can complement ITV’s existing free-to-air channels.”

He added: “Re-shaping the economics of ITV requires change not only to the strategy but also to ITV’s management, culture and organisation. Over time, we expect to move to a position whereby around half of our revenue base is derived from non-television advertising sources.” Several commentators are pointing out that the move is hardly new. ITV has a pretty sorry history when it comes to pay-TV. They spent £1bn of shareholder funds trying to do what was called ITV Digital and it folded in the end.

Watch the video clip here.