ITV eyes return to pay TV market

U.K. broadcaster seeks new revenue stream

LONDON — ITV is poised to re-enter the pay market — but on a more limited basis than the ill-fated ITV Digital venture that cost Carlton and Granada £1 billion ($1.5 billion) when it went under in 2002.

CEO Adam Crozier is expected to reveal details of a standalone pay web when ITV’s half-year results are announced today.

Crozier and ITV chairman Archie Norman are desperate to create new revenue streams to augment the broadcaster’s traditional advertising business, which is facing longterm decline.

A new, male-skewed channel and versions of some of ITV’s HD channels are believed to be in the cards, which would be welcomed by pay TV platforms BSkyB and Virgin Media as both are attracting increasing numbers of subscribers for their HD offerings.

According to a recent report by Bank of America Merrill Lynch “advertising alone is no longer enough to maximize the value of ITV’s audiences.”

It said that restructuring to cut costs would not address the limitations of ITV’s free-to-air model and suggested a wholesale model would solve these problems.

It added: “ITV would be able to tap into much larger, growing and less volatile subscription revenues, and would be transformed into a growth story, geared to the growth of pay TV.

“This would not be a new development with U.S. broadcasters now tapping pay revenues via re-transmission fees, a trend which has been transformational for their profitability.”

ITV set up ONdigital in 1998 and rebranded it ITV Digital in 2001, but it was a money-losing venture from the outset and ITV was forced to pull the plug in 2002 following a bruising battle with BSkyB.

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