17 May 2007
ITV plc AGM Statement 17 May 2007
Stabilising the core business and investing for growth
The clear imperatives for management are to improve the performance of the ITV1
schedule and explore the opportunities that exist for the business, while
addressing some of the regulatory constraints. The progress we have made to
date is encouraging, the rate of decline of ITV1 SOCI is stabilising and our
digital channels continue to perform well. The total TV advertising market is
less volatile than last year. We are also creating opportunities to increase
distribution of ITV's valuable content both online and on digital broadcast
platforms. We are currently engaged in a wider review of the allocation of
resource within the Company to maximise future growth prospects in the medium
term. We will update the market on this review by the Autumn.
In March of this year, we were the first company to introduce an independent
review of our premium rate telephone services (PRTS) so that we could ensure
fair and transparent interactions. All our current programmes have been cleared.
However, the poor execution of these services across the sector has reduced
consumer confidence and is having a material impact on PRTS revenues. ITV is
committed to publishing the findings of the current independent review of PRTS
in ITV programming.
In the first quarter of 2007 we identified that total UK television advertising
revenue had stabilised, and this trend has continued. Total UK television
advertising for the six months to June is flat compared to the same period last
year. ITV1, affected by the contract rights renewal (CRR) remedy, is down by
9.6% over the first half of 2007, whilst ITV plc total advertising revenue is
down by 5.7%.
Channel ratings and production
Over the first 17 weeks of 2007 to 29 April, the ITV family of channels
(including GMTV) achieved a viewing share in multichannel homes of 21.9% which
was slightly ahead of the same period in 2006. In all homes the continuing,
rapid take-up of digital multichannel television resulted in the ITV1 adult
share of commercial impacts (SOCI) being 6.2% down at 32.6% over that period,
whilst the corresponding period in 2006 had been down 10% on 2005. The growth
in SOCI of our digital channels over the first 17 weeks of 2007 was 18% and the
ITV family of channels overall was down 3.8% at 41.7%.
In our US production business we are delighted to have agreed the acquisition
for £2.9 million of a 51% controlling interest in Jaffe/Braunstein Entertainment
LLC, a highly respected and critically acclaimed Los Angeles-based producer of
scripted telefilms and mini-series.
In early 2007 we concluded that the level of revenue being generated by our ITV
Play channel did not merit its continued operation. We therefore decided to
close the channel whilst continuing with ITV Play programming during the night
on ITV1 and ITV2. Immediately following concerns being expressed about UK
television quizzes and game shows incorporating premium rate telephone services
(PRTS), we announced on 5 March that we were reviewing all of our activity to
ensure that ITV delivered quizzes and game shows in a fair and transparent
manner for our viewers' enjoyment. That review has now cleared all our current
output and we have strengthened our procedures to comply with or exceed the
provisions of the code issued by the premium rate telephony regulator, ICSTIS.
The level of revenue now being generated by ITV Play is running at a significant
reduction to 2006. Other PRTS revenue is down by approximately 20% in March and
April and concerns remain about when consumer confidence in this area will be
Carlton Screen Advertising (CSA), our cinema advertising business, has had a
slow start to the year and we expect CSA to be in loss again this year.
On May 1 we held a press launch for our new broadband offering, ITV.com, which
we are confident will be the most comprehensive web site offered by any UK
commercial broadcaster. ITV.com will provide an attractive free service to
consumers and compelling online opportunities for our advertisers. ITV.com
launches to consumers this summer and will offer live streaming of ITV's
channels, a 30 day catch-up service and a 'best of ITV' archive. Our regional
broadband TV service, ITV Local, has been extended to the London and Central
regions and now covers 45% of the UK population.
In April ITV announced that it would be establishing a joint venture company
with the BBC to launch a Freesat service in Spring 2008. Freesat will
complement Freeview in driving the take-up of free-to-air digital services.
On 27 April both the Office of Fair Trading (OFT) and Ofcom announced their
reports on the purchase by BSkyB in November 2006 of a 17.9% shareholding in ITV
plc. Those reports identified issues which both regulatory bodies consider
should be reviewed further and a decision on a potential reference by the
Secretary of State at the Department of Trade and Industry to the Competition
Commission on public interest grounds is expected by 26 May. ITV will
co-operate fully in any regulatory process.
Michael Grade, Executive Chairman of ITV plc, said:
'I'm encouraged by the progress we've made so far this year, but there is still
a great deal more to do. We are taking steps to stabilise our core business and
ensure future growth by reviewing the best allocation of our current resources.
'In recent months we have managed to slow the rate of decline in SOCI and
viewing share on ITV1 as we begin to see new programming from our commissioning
team delivered on-screen. In addition, we've made some key acquisitions to
strengthen our schedules, such as the FA Cup and England rights from 2008,
secured long-term deals with major talent such as Ant and Dec and Simon Cowell,
and are extending our contract with ITN for news. The relaunch of ITV.com will
help to ensure that ITV continues to grow its share of increasing online
'The Board takes the PRTS issues very seriously and is committed to publishing
the findings of the current independent review of PRTS in ITV programming.
'Encouragingly the airtime sales market appears less volatile than last year,
and we remain firmly focused on the needs of our viewers and advertisers. Our
goal is to create long-term value for our shareholders by exploiting our content
on an expanding number of media platforms, both in the UK and internationally.'
For further information please contact:
Tel: 020 7843 8000
Brigitte Trafford Group Communications Director
Jim Godfrey Director of Corporate Affairs
James Tibbitts Company Secretary
Georgina Blackburn Head of Investor Relations
Tulchan Communications Group
Tel: 020 7353 4200
This information is provided by RNS
The company news service from the London Stock Exchange