U.K.’s ITV returns to profit

Chairman calls for further changes to business

LONDON –ITV’s new chairman, Archie Norman, announced Wednesday that the battling U.K. terrestrial web made a small profit last year, but he signalled the need for a fundamental overhaul of large parts of the business.

The broadcaster swung to a pre-tax profit of £25 million ($37.6 million) for 2009 from a loss of $4.06 billion in 2008, when the group took a hit on impairment charges due to the deterioration of the stock market.

ITV said that while its advertising revenue for the year was down 9%, the wider U.K. market fell by 11%.

That market was now recovering, and ITV expects a 7% hike in ad revenues for the first quarter of 2010.

“We have lived through the fire of recession and come out the other side with a stable financial position,” said Norman, who took over as ITV chairman in January.

Norman said ITV’s radical cost cuts had made a big impact on the bottom line. But, as the broadcaster prepares for the arrival of new CEO Adam Crozier, Norman added that ITV needs to make big changes in how it runs its content and online businesses.

“Parts of the business are not performing as we’d like them to, and ITV1 (the web’s flagship channel) cannot afford to fall back,” he said in a conference call. “Owning content is more important than ever. ITV Studios has lost share as a result of (program) budget cuts, both here and elsewhere.”

Norman said the web’s Internet business must improve but ruled out deals with content aggregators like U.S. firm Hulu. And he said the broadcaster’s existing channels won’t go behind a pay wall. He said: “Pay wall, pay TV, subscriptions… would it be a good idea in the future for some of our income to come from there? It may be — it is a more stable platform (for revenues). (But) we have no product suitable for a pay platform right now. “Speculation we might take ITV2, 3 or 4 onto a pay TV platform is not realistic.

“Were we to develop a proposition in the pay (TV) market we would need a very different product than we have at this time.

“Is there in principle a case for looking at it (a channel) out of the content and programming we have? Absolutely.”