A SERIES of acquisitions is expected to have helped ITV grow its production arm’s profits as the broadcaster continues to look to reduce its reliance on the dwindling advertising market.
The television company is tipped to post a 30 per cent jump in operating profits at its ITV Studios business to £65 million when it unveils its half-year results on Tuesday.
Profits will have been boosted by the firm’s success in selling programmes overseas.
ITV warned in May that the outlook for TV advertising remains tough this year in the absence of major events such as last year’s Euro 2012 football tournament.
While first-quarter advertising revenues grew by 6 per cent, results for the first six months of the year are expected to show advertising demand flattening out. However, Scots-born chief executive Adam Crozier has insisted ITV’s advertising revenues are on track to beat full-year market predictions.
Analysts at Credit Suisse think Britain’s recovering economy could also boost advertising spending. They see ITV growing first-half adjusted profits to £264m from £228m a year earlier. But group revenues are forecast to fall by 1 per cent to £1.11 billion.
Sam Hart, an analyst at Charles Stanley, has longer-term concerns due to the plethora of digital channels.
“Advertising revenues could remain under long-term structural pressure as audiences continue to fragment,” Hart said. “It remains unclear to us whether new sources of revenue – online, pay-TV, interactive and studios – would be able to fully compensate for such a decline.”
On Friday, the FTSE 100 group capped off a string of takeovers by snapping up Big Talk – the maker of movie hits such as Hot Fuzz, Shaun Of The Dead and The World’s End – for £12.5m.
Shareholders in Big Talk – which is also behind TV series including Friday Night Dinner, Him & Her and Rev – include actors Nick Frost and Simon Pegg, director Edgar Wright and the BBC.
Last month ITV took a 65 per cent stake in Los Angeles-based Thinkfactory Media, the maker of “reality” TV series and dramas including the Emmy Award-winning Hatfields & McCoys starring Kevin Costner and Bill Paxton, for $30m (£19m), with the option to buy the remaining shares within five years.
In May, the firm paid $25.7m for a 60 per cent stake in High Noon Entertainment, which makes Guinness World Records Gone Wild, Hurricane Hunters and The Great Baker.
The Garden – which has made documentary series including 24 Hours In A&E, Inside Claridge’s and The Merits Of Ferrets – was taken over for £18m in April, while a 61.5 per cent stake worth $40m (£26m) was taken in December in Gurney Productions, best known for its American Guns and Duck Dynasty series.
ITV kicked off its acquisitions in August by buying So Productions from presenter Graham Norton for £17m.