* 2008 operating earnings down 32 percent
* 2008 loss 2.7 bln pounds after writedown
* Sees advertising down 17 pct in Q1 2009
* To sell social network site Friends Reunited
(Adds reaction, share price, details)
By Kate Holton
LONDON, March 4 ITV, Britain's largest
free-to-air commercial broadcaster, suspended its final
dividend, cut 600 jobs and announced plans to sell assets as it
reported results hammered by the severe downturn in advertising.
ITV, which has seen it shares crash around 80 percent in the
last two years, posted a loss of 2.7 billion pounds ($3.81
billion) due to a writedown.
The home to talent show X-Factor and soap opera Coronation
Street also said it was scrapping revenue targets and would
slice 65 million pounds off its programming budget after
advertising revenues slumped almost 20 percent in the first
"Current conditions in the advertising market are the most
challenging I have experienced in over 30 years in UK
broadcasting," said Executive Chairman Michael Grade, who
described the downturn as a "short term horror".
"Visibility on future revenues is limited and trading in
2009 remains uncertain."
The group said net advertising revenue for the family of
channels was down 4 percent in 2008. It is expected to be down
around 17 percent in the first quarter of 2009 and the whole
advertising market is expected to be down 20 percent in April.
ITV channels held their viewing share.
It said its 2012 revenue targets set in 2007 were no longer
appropriate and it would now focus on its core business as a
producer and broadcaster, reducing costs and increasing cash
It pledged to deliver annual cost savings in 2011 of 245
million pounds against the 2008 outturn. Of this, 155 million
pounds of annual savings will be delivered in 2009, rising by 20
million to 175 million in 2010.
It is seeking to dispose of the social network Friends
Reunited, will close ITV Local and is considering its options
for multiplex business SDN.
Analysts had expected ITV to cut assets, jobs and the
dividend and they welcomed the new strategic update. Shares in
the group were down 4 percent at 22.8 pence against an otherwise
"The numbers were weak but that was expected," Justin
Diddams at RBS told Reuters. "Strategic update was helpful, with
higher cost savings.
"The downside was the asset writedowns, and advertising
taking the shine off things because people expected April to be
stronger. The management is making the right noises but it is
tough out there."
Operating earnings before interest, tax and amortisation
(EBITA) in 2008 were down 32 percent at 211 million pounds,
slightly below analyst forecasts of 217 million pounds,
according to Reuters Estimates.
It reported a 2.7 billion pounds ($3.81 billion) loss after
an impairment charge against broadcasting and online assets.
Revenues were down 3 percent at 2.03 billion pounds, slightly
ahead of a forecasted 2.01 billion.
"The Board is recommending the suspension of the final
dividend," Grade said. "This is not a decision taken lightly.
The Board's judgement is that it represents the prudent course
in present conditions."
Analysts at Numis said the cost savings largely mitigated
the underlying deterioration in trading, limiting their 2009
downgrade to around 20 million pounds.
On a conference call with journalists, Finance Director Ian
Griffiths said there was little appetite in the market for a
pension buyout at the moment and said it would not appeal to ITV
even if it was possible.
Asked whether the group would consider a rights issue, Grade
said they would keep all options open but declined to comment
(Reporting by Kate Holton and Paul Sandle; Editing by David