ITV profits rise by $144 mil

Ad income at flagship channel ITV1falls by $87 mil

LONDON — Blighty’s embattled broadcaster, ITV, has reported better than expected annual results as it warned that the first six months of 2006 are likely to prove difficult.

Profit for the year to Dec. 31, 2005, was £226 million ($393 million) compared with £143 million ($249 million) the previous year.

Overall revenues were up by 6% to £2.17 billion ($3.77 billion) but revenues at core service, ITV1, dipped 3.3% to £1.46 billion ($2.53 billion).

Advertising income at ITV1, the home of flagship shops such as Blighty’s most popular soap “Coronation Street” and talent reality skein, “The X-Factor,” was down by £50 million ($87 million).

However growth at digital weblets, ITV2 and ITV3, meant that combined ad revenues for the broadcaster’s expanding suite of channels grew by 2.7%.

The results saw a minor rally in stock prices but ITV’s stock price remained depressed and may reignite speculation regarding a U.S.-led takeover bid.

ITV blamed ITV1’s decline on the “rapid take-up of digital multi channel television and the increasing number of channels available to viewers.”

CEO Charles Allen warned that total ad revenues were expected to decline about 10% in the first quarter of 2006.

Sales should pick up in the second quarter due to Easter and June’s soccer World Cup. ITV is sharing World Cup coverage with the BBC in the U.K.

As a sop to a skeptical City, ITV announced that the U.K.’s biggest advertiser, consumer group Unilever, has inked a deal to spend more than £200 million ($348 million) with the broadcaster during the next four years.

In another move to please the market, ITV announced a plan to buy back £300 million ($522 million) of shares

CEO Charles Allen said: “We’re in a transition phase from analog to digital. More people in a multi-channel home are watching ITV this year than they were last year, and that’s very good news for the future.”

He predicted that by 2010 half of ITV’s revenues would be generated from outside ITV1.

ITV’s latest multi channel offering, kids’ weblet, CITV, launches on Saturday into what is a very tough market.

Allen confirmed that interactive gaming channel, ITV Play, would bow later this spring.

The new “participation TV” station will be available as a stand alone service on DTT platform, Freeview, and over-night on ITV1 and ITV2.

Allen indicated that ITV, which is experimenting with local news and information broadband services aimed at tapping into new advertising markets, intends to expand its broadband offering later this year.

Upcoming is a dedicated broadband soccer channel providing free games and pay-per-view matches, but with rival, BSkyB, set to retain the lion’s share of Premier League matches in the immediate future it remains to be seen how popular this service will be.

There are also plans for VOD, but details remain sketchy.

ITV closed its rolling news web last year and launched ITV4 aimed at younger males. To date ITV4 has struggled to replicate the success of ITV2 and 3.