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REFILE-UPDATE 2-ITV's production arm shields it from advertising decline
March 1, 2017 / 7:43 AM / 7 months ago

REFILE-UPDATE 2-ITV's production arm shields it from advertising decline

(Refiles to correct verb in second paragraph)

* Broadcaster’s earnings rise 3 pct

* Ad revenue declined in 2016, seen 6 pct down in early 2017

* Programme making helps to offset impact of ad weakness

By Paul Sandle

LONDON, March 1 (Reuters) - British broadcaster ITV said a strong performance from its programme making business helped it to weather the first decline in advertising revenue since 2009.

ITV, which broadcasts long-running soap opera “Coronation Street” and police drama “Broadchurch”, said advertising revenue was likely to fall six percent in the first four months of 2017.

ITV Chief Executive Adam Crozier said traditional TV spot advertising now accounted for less than half of ITV’s revenues.

Investment in production to diversify its revenues had paid off as the company reported a better-than-expected 3 percent rise in adjusted annual earnings per share.

Crozier said the weak advertising market would persist early this year.

“If you look at the categories that’s coming from, predominantly it’s food, and FMCG (fast-moving consumer goods) and retail,” he told reporters on Wednesday.

“A lot of the marketing support there at the moment is going into supporting price cuts given the levels of inflation that are coming through in that market.”

ITV reported earnings per share of 17 pence, beating market forecasts of 16.3 pence, on total external revenue up 3 percent to 3.06 billion pounds in 2016.

Shares in ITV, which have recovered most of their losses since the EU referendum in June, were trading up 2 percent at 206 pence.

PREDATOR OR PREY?

There was a “healthy pipeline” of acquisition opportunities, Crozier said, although Entertainment One, the Canadian company ITV tried to buy a last year, was not one of them.

“We have no interest in pursuing Entertainment One,” he said of the company behind Peppa Pig.

ITV has long been mooted as a bid target itself, with cable TV giant Liberty Global, which owns nearly 10 percent, seen as one of a number of potential buyers.

Crozier said ITV was a consolidator in the market, and its strategy was aligned with the industry trends towards scale and diversity of revenue stream.

“I accept within that as I look around at other industries, partly as a result of exchange rates and other things, UK companies do look cheaper, better value,” he said.

“I have always been of the view that the best form of defence is attack, which is to keep driving the company forward.”

ITV said it would pay just over 200 million pounds to shareholders in the form of a special dividend of 5 pence on top of a final dividend of 4.8 pence.

Analysts at Citi said the special dividend had not been widely expected and that the cash return signaled confidence in the future.

Editing by Keith Weir

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