July 25, 2018 / 6:30 AM / 2 months ago

Boosted by World Cup and Love Island, ITV targets video-on-demand opportunity

LONDON (Reuters) - The World Cup and reality show Love Island boosted on air and online performance at British commercial broadcaster ITV (ITV.L) which the company hailed as “fantastic” as it reported an 8 percent rise in first-half revenue.

FILE PHOTO: A company sign is displayed outside an ITV studio in London, Britain July 27, 2016. REUTERS/Neil Hall/File Photo /File Photo

Chief Executive Carolyn McCall, who joined in January, said ITV’s share of viewing rose 9 percent to a 10-year high, and its studios production arm had increased revenue and profits.

Under the leadership of her predecessor ITV reduced its reliance on advertising by buying production companies.

Revenue from its studios, which make “The Voice”, rose 16 percent to 803 million pounds, accounting for around half of its total, it said on Wednesday. Overall revenue rose to 1.59 billion pounds ($2.09 billion).

McCall said ITV had been right to shift focus, and its next step would be in subscription video-on-demand (SVOD), territory staked out by Netflix (NFLX.O) and Amazon.com (AMZN.O) .

She said ITV had seen a jump in demand for its ad-free ITV Hub+, driven by holidaymakers in Europe who wanted to see World Cup games or Love Island, but it could go further.

“We see an opportunity to create a subscriber video on demand (SVOD) service on the back of our brand, our content and significant cross-promotional activity,” she told reporters.

“We are actively reviewing what our SVOD proposition will be and we are talking to potential partners.”

She said there was “real demand for British distinctive content”, adding that Britain’s regulator had said it would support more collaboration between public service broadcasters.

An earlier attempt to create a combined VOD platform by British broadcasters was blocked in 2009.

“Online VOD growth represents a massive opportunity for ITV, especially as it is high margin and ITV’s share of VOD is only circa 6 percent versus circa 45 percent in linear TV,” Liberum analysts said in a research note.

ITV shares were up 0.6 percent by 1120 GMT, outpeforming a broadly weak UK equities market.

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ITV said economic uncertainty would result in flat ad revenue in the third quarter, despite the period including England’s World Cup semi-final against Croatia, watched by 26.6 million viewers.

ITV’s total advertising revenue rose 2 percent in its first half, with 48 percent growth from online.

Its online platform is attracting the 16-24-year olds highly prized by advertisers, with some 75 percent registered.

Love Island achieved an average online audience of 300,000, in addition to more than 3 million broadcast viewers.

ITV is producing the show for seven markets, McCall said, and it would take it into another as-yet-unannounced market.

ITV reported adjusted earnings before interest tax and amortisation (EBITA) of 375 million pounds ($493.2 million) for the six months to end-June, down 7 percent but ahead of analyst forecasts of 361 million pounds.

Reporting by Paul Sandle; editing by Kate Holton and Emelia Sithole-Matarise

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