UK commercial television broadcaster ITV is embarking on a “More Than TV” strategy refresh which will look to develop its direct-to-consumer business.
ITV chief executive Carolyn McCall (pictured) unveiled the company’s new approach to meeting consumer appetites for entertainment content in its interim report released Wednesday (July 25). Going forward, McCall said ITV will strengthen its position as an integrated producer broadcaster while growing UK and global productions, and developing its direct-to-consumer relationships.
On an earnings call following the release of the report, McCall said the latter part of the strategy involves bolstering its current online on-demand service, ITV Hub, while also exploring other SVOD offerings through discussions with various potential partners.
As part of the strategy, ITV will pump £60 million ($US78.63m) of investments across its portfolio over the period to 2021, with £40 million (US$52.42m) of investment slotted for 2019. The company is also targeting £35 to £40 million cost savings from 2019 to 2021. While it wasn’t revealed where those savings will come from, the company says they will be achieved “without impacting the culture and creative and commercial strength of the business.”
The plan is intended to deliver double-digit revenue growth per year, averaging 5% compound annual growth in total ITV Studios earnings over the three years at a margin of 14% to 16%, and growing the direct-to-consumer revenues to £100 million by 2021.
“This is very much a refresh not a reboot, as ITV is a strong business, no longer solely reliant on UK advertising,” McCall said in the report. “However, the market is clearly changing and to reflect this we have developed a clear vision and initiatives to drive growth to ensure ITV remains a structurally sound business.”
In its earnings report for the first half of the year, total ITV non-advertising revenue grew 14% to £958 million (US$1.25 billion), which now accounts for 52% of total revenue. Earnings before interest, taxes and amortization declined 7% while earnings per share also declined 8%. The ITV Studios production arm had a 7% growth in EBITA.
However, there was a 12% decline in broadcast and online EBITA which was impacted by costs associated with World Cup coverage.
(With files by Barry Walsh)