ITV restores the dividend but City cuts back forecasts

ITV today pleased shareholders as it brought back the dividend for the first time in three years but analysts cut their profit forecasts because of an advertising slowdown.

The broadcaster behind Coronation Street and The Only Way Is Essex saw half-year profits almost double to £181 million, thanks in part to years of cutting overheads. Group revenues rose only 4% to £1.03 billion as advertising went into reverse after Easter.

Ad sales plunged 9% in May and 14% in June - in line with expectations - as brands cut spending and there were tough comparatives with last year's World Cup. Across the half-year, ITV's advertising was up 2%, slightly behind the wider market. Chief executive Adam Crozier insisted: "We expect to outperform the TV advertising market across the whole of the year."

The ad slowdown looks set to ease, with July forecast to be down 2%, August down 4% and September flat.

But broker Numis Securities cut its estimate for ITV's ad growth for the full year from 3% to 1% and reduced its profit forecast by £15 million.
Crozier pointed out ITV was performing strongly on-screen, screening eight out of this year's top 10 TV dramas.

He was also hopeful that Simon Cowell's new gameshow Red or Black and the Rugby World Cup in September will boost ratings. Crozier claimed that audiences on Daybreak, ITV's under-fire breakfast show, have "stabilised".

Programme-making arm ITV Studios, behind shows such as I'm A Celebrity, showed signs of recovery, with external revenues up 11% to £140 million.
The production arm has won 68 new commissions so far this year from both UK and international broadcasters, sharply up on a year ago. New drama Titanic, created by Downton Abbey writer Julian Fellowes, has been pre-sold to 15 countries.

Crozier is one year into a five-year transformation plan to reduce ITV's reliance on advertising and will launch an online pay strategy next January.

ITV has already been collecting data from viewers with "register-to-view" trials for hit shows. A new tie-up with Apple has produced 800,000 downloads in three weeks. Online revenues were still a paltry £16 million.

ITV will pay an interim dividend of 0.4p - the first time since 2008 after it made a £2.7 billion loss and suffered two years of plunging advertising.

Net debt fell to just £52 million but Crozier played down talk of acquisitions. Shares slipped 0.8p to 67.2p - down from the 95p level at first-quarter results in March. Michael Greenlees, chief executive of media research firm Ebiquity, said: "ITV still delivers terrific audiences but there's an enormous swing in its fortunes based on its advertising model. ITV has singularly failed in its programme of revenue diversity."