Tuesday, 29 April 2014

ITV Studios profits up +24%. Why? A traditional TV broadcaster making money?






ITV, is a traditional TV broadcaster that's showing growth?

Why?

Because of the resurgence of advertising in the UK but largely because, it has moved to become less dependent on advertising (!) and more into content creation. It understands that the traditional TV model is diminishing so it's now more of a content creator.

It sells programmes to other broadcasters (including BBC) but also to new buyers like Netflix, Hulu and Xbox.

The production side, ITV studios, showed a +24% 2013 profit increase (£133m) on turnover of £857m. They now have 60 shows on US channels (more than 50% of their revenue is overseas) such as 'Hell's Kitchen' on Fox and Mr. Selfridge is in 150 countries (including being streamed on Amazon Prime).

Last year they spent £66m on buying independent content producers and yet acquisitions added £97m to ITV's revenue. Good result. More funding for acquisitions is planned too, possibly nearly £200m as a war-chest in order to develop more content to sell.

There's little doubt that ITV are learning the online lessons and looking at it as an opportunity to become programme makers rather than seeing it as a threat. Online in essence, has opened up a market of content purchasers.

In other words, whilst the likes of Netflix are very techy, they're not programme makers (although they are getting there now) whereas ITV have a long history of making strong programmes. So you match one against the other.

And you start seeing TV Ad revenue as not being the driver anymore.

Looks to me, that ITV have got it.