ITV’s profits slump in first half of ’08

Company plans to cut costs as ad revs dip

LONDON — Reporting a drop in profits for the first six months of 2008, U.K. commercial web ITV said it plans to slash an additional £35 million ($68 million) in costs by 2010 and warned of a sharp fall in TV ad revenues in September.

While group revenue for the first half rose 3% to $2.01 billion, earnings fell 20% year-on-year to $236 million, and pre-tax profits were down 28% to $177.5 million. According to ITV chief operating officer John Creswell, the fall reflected an increase in ITV’s sports costs (up $56.6 million compared to the first half of 2007), primarily due to the Euro 2008 soccer tournament in June.

However, Blighty’s worsening economic outlook is also hitting the broadcaster, which was forced to take a $3.1 billion non-cash impairment charge during the period — a writedown against future revenues. Plans for boosting the web’s revenues from production and online activities have also been hit, although both divisions reported healthy growth.

ITV’s goal of doubling global content revenues to $2.3 billion by 2012 has now been cut to $2 billion, while the drive to increase online revenues to $292.6 million by the end of 2010 has been extended to 2012.

A year after unveiling an ambitious turnaround strategy for the embattled web, chairman Michael Grade was keen to highlight improvements in viewing share, up 2.5%, and growth in its global content and online divisions.

At global content, international production revenues were up 62% at $107.3 million, with strong growth at its U.S., German and Australian production companies. “Our business in the U.S. is going extremely well,” said Grade. “They have a very strong order book. We have shows ordered on three of the four networks.”

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