Crozier proves he has the X Factor but warns of slowing ad revenue growth

Published on Monday 15 November 2010 21:11

THE return of The X Factor and last summer's football World Cup helped power a strong rebound in television advertising for ITV, which yesterday posted a 16 per cent boost in third-quarter revenues.

But ITV's new Scots-born chief executive Adam Crozier forecast that ad revenue growth would slow to 10 per cent in the final quarter of 2010, and said he was cautious about prospects in 2011.

In a trading update the company said group revenues rose 11 per cent to 1.46 billion in the nine months to end-September compared with 1.31bn in the same period of 2009 when Britain was in recession.

Crozier said yesterday: "The television advertising market has continued to recover strongly.

"However, this does not disguise the significant challenges ITV faces and we remain focused on delivering the five-year transformation plan. The economic outlook for 2011 is uncertain and we continue to plan on a cautious basis."

City analysts were broadly positive about the statement and forecasts, even though shares in ITV closed down 5 per cent, or 3.95p, at 67.10p. They said that ad revenues in Q4 would be helped as The X Factor talent show heads towards its December finale. Trade reports have suggested that a 30-second advertising slot during the weekend of the programme's final could cost advertisers up to 250,000.

Other programme successes expected to boost Q4 include Downton Abbey, not shown in Scotland, which drew an audience of more than ten million for its final episode.

Crozier joined ITV from the Royal Mail on a potential mega-15 million pay package earlier this year if he meets performance targets at the UK's biggest commercial free-to-air broadcaster over the next five years.

His strategy, in conjunction with ITV chairman Archie Norman, has seen the group launch high-definition versions of ITV2, ITV3 and ITV4. It has also agreed new three-year deals for The X Factor and Britain's Got Talent.

The company, which also plans to enter the pay-TV market to cut its overwhelming dependence on volatile advertising revenue, did not flag reinstating a dividend yesterday. The last dividend paid by the group was the interim payout of 0.675p in 2008.

Crozier has said the dividend policy would be kept under review, but would be balanced against factors such as the need for investment at ITV and debt levels.

One analyst said: "To be honest, reports that ITV might be on the point of reinstating the dividend were overcooked.

"These latest revenues were good but against weak comparators.The company is still only really back to the revenue levels it had two years ago.

ITV's calls for the scrapping of the Contract Rights Renewal system, which allows advertisers to cut the amount they pay if ITV1's audience shrinks, were rejected last year.

The broadcaster, which is also home to shows such as I'm A Celebrity...Get Me Out Of Here! and Coronation Street, accounted for 982 of the top 1,000 most-watched programmes on commercial television last year.