21 June 2006
ITV announces additional cash return to shareholders, efficiency savings and new
June 21 -- ITV plc will today outline its growth strategy for its channels,
content, consumer and commercial operations.
• Increasing return of cash to shareholders from £300 million to £500
million in 2006.
• Delivering efficiency savings of £100 million by end 2008 from business
re-engineering and operational reviews. This is in addition to the £120
million savings already delivered as part of the merger.
• ITV plc H1 total revenue estimated to be up 2% on 2005.
• Launching a new channel and increasing investment in multichannel
programming by £20 million in 2007.
• ITV SOCI (share of commercial impacts) target for switchover at 2012.
• Potential to deliver PSB and licence fee benefits of £200 million by
switchover in 2012.
£500 million to be returned to shareholders in 2006
At its full year results for 2005 in March 2006 ITV announced an initial return
of cash to shareholders of £300 million. The Company said then that it would
continue to review the capital structure of the business and would assess:
- the appropriate level of distributions to shareholders, as the disposal of
non-core assets continued
- while maintaining a stable and efficient balance sheet and taking into
account the needs of its stakeholders
- and improving the returns for its shareholders, who have generally
expressed the view that the Company should retain an investment grade credit
Taking all this into account, together with the current market environment, the
Board has increased the amount of this initial return of cash to shareholders to
£500 million in 2006. ITV will continue to review the capacity to return cash to
shareholders in future years as its capital structure allows.
Deliver efficiency savings of £100 million by 2008
Since the merger ITV has delivered more than £120 million of merger related cost
savings ahead of schedule. Last September the Company announced a major
restructuring. Since January 2006, ITV has been looking across the business to
improve further its processes and its operational efficiency in light of this
restructure. That process continues but ITV has already identified an additional
£40 million per annum of savings from improved overhead efficiencies, £30
million for schedule efficiencies, in part as a result of the evolution of ITV's
PSB requirements as digital switchover approaches, and a further £30 million per
annum from 2007 in reduced sports programming costs.
ITV SOCI target for digital switchover at 2012
As television transitions from an analogue world of five channels to digital
platforms with several hundred channels there will inevitably be a reduction in
the number of viewers to ITV1.
ITV's performance is relatively stable on each platform and the Company believes
that once switchover is completed ITV's overall share of viewing will stabilise
and ITV will benefit from viewers being able to watch all of its digital
channels. These channels are proving very popular with viewers and in 2006 to
date are delivering a 6% SOCI, up 28% on the same period in 2005. Later in 2006
ITV will launch a +1 version of ITV2 on satellite and cable platforms and in
2007 will invest a further £20 million in programming for its digital channels.
ITV is now targeting a SOCI across its channels of 38.5% at digital switchover
in 2012. In the next few years there are factors which will affect this measure
including the rate of change in ITV's public service broadcasting obligations,
the speed of digital take up and equalisation of advertising minutage with other
channels, and the target is based upon ITV maintaining expenditure levels on the
ITV Revenue outside ITV1
ITV has previously announced targets for £250 million of advertising and
interactive revenue from digital channels by the end of 2008 and for 50% of
total revenues to come from sources outside ITV1 spot advertising by the end of
2010. Building on the 2005 base of £715 million of revenue outside ITV1 spot
advertising, ITV has identified additional revenue potential that increases that
figure to between £1,265 million and £1,465 million by the end of 2010.
ITV Revenue in H1
Whilst the advertising sector has been weaker than forecast over recent months,
television has been less affected than other traditional media such as
newspapers and radio. Regional television advertising, which ITV is uniquely
able to provide on a focused local area, is up 18% at £98 million across all
ITV's channels in the first half of 2006 year-on-year.
ITV's broadcast revenue outside ITV1 continues to grow. ITV's digital channels
continue to perform strongly and in the first half are up 42% at £69 million.
Sponsorship is increasingly attractive to advertisers and is up 24% at £21
million. Interactive advertising and online revenue, whilst smaller revenue
streams, are up by 175% and 46% respectively.
ITV plc total net advertising revenue at the half year is estimated at £750
million, down 4.6% year-on-year, in line with expectations. Total Broadcast and
Consumer revenues for the half year are estimated to be £930 million (including
CSA), up 3% on 2005. External revenues in the Content business are 5% ahead in
the first half of 2006 (excluding discontinued operations) at £125 million
reflecting increased sales both to other UK broadcasters and internationally.
ITV's US production business currently has five series on Network Television.
Total revenues for the half year are estimated to be up by 2% on 2005.
Charles Allen, CEO said:
'Since the merger ITV has increased its profitability, delivered ahead of all
its targets, raised £400 million from the disposal of non-core assets and will
have paid £1.1 billion to shareholders in dividends and share buy backs by the
end of 2006. We continue to set ourselves aggressive targets. ITV with its
strong brand, original content, Freeview capacity and cross promotional
capability is uniquely well-positioned to benefit as the UK television market
continues to fragment and the number of outlets and demand for high quality
content continues to increase. We have a renewed focus, a clear strategy and the
right management team that will enable us to deliver increasing value to our
viewers, advertisers and shareholders.'
Georgina Blackburn, Head of Investor Relations - 020 843 8000
Brigitte Trafford, Jim Godfrey - 020 7843 8000
Citigate Dewe Rogerson
Simon Rigby, Anthony Kennaway - 020 7638 9571
This information is provided by RNS
The company news service from the London Stock Exchange