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ITV steps back into pay TV market

Satcaster BSkyB to carry three ITV HD channels

LONDON — ITV has confirmed that it will move back into pay TV — with HD versions of its three digital webs, ITV2, 3 and 4 all being made available on BSkyB this fall and winter.

However, new CEO Adam Crozier, who arrived at the beleaguered broadcaster three months ago, said there were no plans to launch a stand-alone pay channel.

Crozier said the move into pay, a somewhat cautious start, was consistent with his strategy — part of a “five-year transformation plan” — to generate half of ITV’s revenues from activities other than traditional spot advertising.

“At present 74% of our revenues depend on spot advertising,” said Crozier in a conference call held to announce interim results.

Given that in real terms ITV’s advertising take was in decline and the inherent “volatility” of the spot advertising market, Crozier said he was determined to develop successful new revenue streams by 2015.

He refused to say how much the carriage deal with BSkyB was worth, but indicated that other contracts with U.K. payboxes would be announced in due course for the three HD webs.

Crozier is also relying on the broadcaster’s production arm, ITV Studios, to raise its game.

He wants ITV Studios to make more shows for the web’s domestic networks — especially flagship channel ITV1 — and beef up coin from selling and producing shows for international markets.

The emphasis would be on returning drama series and factual entertainment formats that can satisfy domestic auds and overseas buyers.

Crozier, making his first public outing since being appointed in January, said ITV had under-performed for the previous 10 years.

“For the past decade, ITV has not faced up to the challenges presented by the rise of Internet-based platforms, the continuing growth of pay TV and subscription services and the globalization of content,” said the new topper.

He said he was under no illusions about the scale of the task that needed to be accomplished for ITV to reinvent itself for a digital world.

However, the annual budget for ITV’s flagship web, ITV1, would remain static at around £800 million ($1.2 billion) for the next two years.

Analysts had hoped for an increase.

A new £75 million ($120 million) content fund, targeting at improving ITV’s online efforts, had been set up.

ITV announced a net profit of £71 million ($113 million) for the six months to June compared with a loss of more than a £100 million ($159 million) in 2009.

Ad revenues were up 18%, but this was against a steep decline a year ago.

Crozier was cautious over the prospects for the final quarter and 2011 as a whole.

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