ITV 'open to acquisitions' after earnings rise

Wednesday 26 February 2014 18.20
ITV's CEO Adam Crozier rules out bid for UK's Channel 5
ITV's CEO Adam Crozier rules out bid for UK's Channel 5

British broadcaster ITV said it was on the hunt for acquisitions as it posted an increase in revenue that will help fund another special dividend for shareholders.

ITV said it would pay £161m in the special dividend of four pence a share, in line with 2012, and a full-year dividend of 3.5 pence, up 35% from 2012.

Although revenue was slightly better than expected, ITV's shares were lower on London trade, with some analysts saying the dividends were less than expected.

ITV's chief executive Adam Crozier ruled out a bid for fellow British free-to-air broadcaster Channel 5, with first-round offers due in tomorrow, but said ITV was continuing to look for acquisitions.

"We're being very clear that if appropriate (acquisitions) come up and we think they add something to ITV Studios ... then we will look at those key opportunities," he said.

Crozier said ITV, now in the fourth year of a five-year turnaround, was now much stronger both operationally and financially.

The company reported a 9% rise in external revenue to £2.39 billion pounds in the year to December 31.

Non-advertising revenue rose 17% to £1.21 billion, driven by a good performance at production unit ITV Studios, which sells content globally, as well as online, pay and interactive services.

Core earnings were up 21% to £620m, aided by cost savings of £28m in 2013, with further cuts of £10m targeted in 2014.

ITV Studios saw a 20% rise in revenue last year to £857m after the acquisition of four production companies.

Crozier said he expected continued double-digit growth in ITV's online, pay and interactive division in 2014, with the broadcaster looking to increase revenue from pay-TV.

In January, ITV said it was launching its first pay-TV channel, dedicated to British drama, on Sky's satellite and online platforms.

Total net advertising revenue (NAR), a key industry indicator, grew 2% in 2013. Crozier said NAR was expected to grow by 5-6% in the first four months of 2014.

But analysts cautioned that advertising was increasingly volatile as the importance of having live sporting events with guaranteed audiences increased.

In November, BT won the right to show Champions League soccer from 2015, replacing ITV and BskyB. ITV is still likely to gain from events such as the 2014 World Cup.