ITV posts £105m loss during ‘worst’ first half
ITV has posted another big loss following the “worst” decline in TV advertising but suggested the pain could be easing.
The broadcaster saw revenue drop 12% to £909m in the six months to June 30 and it posted a pre-tax loss of £105m – an improvement on last year’s £1.5bn, a figure that took into account a write-down in the value of assets.
It also confirmed today that it has sold the social networking website Friends Reunited to DC Thomson for £25m four years after buying it for £170m.
The sale was part of a reorganisation designed to strengthen the balance sheet of the group which employs nearly 1,000 people at its studios in Manchester.
ITV was considering raising more cash by selling this site and moving to MediaCity in Salford but a spokesman ruled out the move today and said ITV will be staying in Manchester “for the foreseeable future”.
Declining ad revenues have forced ITV to review its cost base. Earlier this year it announced 600 job cuts and it plans to save £285m by 2011. It said it had saved £57m in the half-year while net debt remained steady at around £728m.
The broadcaster has also seen a huge surge in the scale of its pension liabilities. The deficit was valued at £538m at the end of June, compared with £178m at the year end. It said this was down to a decline in the value of scheme assets and the impact on liabilities of a higher inflation assumption.
According to ITV UK television has suffered its worst year-on-year advertising decline, with overall revenues slumping by 17%. The group said it had outperformed the market with net revenues dropping by £108m, or 15% and it has seen a slight easing of this decline since June. It forecasts ad revenues to drop by 12% in the third quarter and by 7% in September.
Chairman Michael Grade, said: “Our financial results for the half year reflect the impact of the unprecedented downturn in television advertising, offset by the comprehensive action we are taking in mitigation.
“The rate of market decline has eased slightly in the second half and ITV continues to outperform the market. We are maintaining our peak audience share across our channel family and are growing our share of television advertising, while delivering our targeted cost-savings.”
Andy Viner, Head of Media, at accountants BDO Stoy Hayward says: “Today’s results from ITV are respectable in that ITV just outperformed the market, and has demonstrated that its cost cutting programme is under control.
“However the bottom line is that the company still lost £105m – and took a substantial loss on the sale of Friends Reunited – so it is clear that ITV is facing a number of significant challenges.
“It still has a high level of net debt (£738m) which has remained broadly unchanged and its pension deficit has increased from £178m to £538m. Both of these will continue to put pressure on ITV’s cash position so it is unsurprising it has suspended its interim dividend.”
