ITV profits jump 40pc, helped by World Cup

ITV enjoyed a 40pc leap in pre-tax profits to £250m in the first half of the year as advertisers paid top prices for World Cup slots.

The resurgent broadcaster also reported strong growth in its online, pay and interactive businesses.

Overall, external revenues were up 7pc compared with the first six months of 2013, to £1.23bn.

Television advertising, which despite the growth of ITV’s production arm ITV Studios remains the group’s biggest revenue source, grew by 7pc, faster than the market. Most of the growth came in the second quarter, when the World Cup drove a 13pc increase in sales, compared with just 2pc in the first three months of the year.

The revenue growth came in spite of a 5pc decline in the ITV’s channels share of viewing, meaning the company is increasing its share of the advertising market. It blamed falling viewing share on “disappointing” contributions from ITV2 and ITV3.

Adam Crozier, ITV’s chief executive said: “The economic recovery is leading to an improved advertising market, with good growth across all key categories and ITV is well placed to take market share. We will significantly outperform the market over the full year.”

^{ITV gained viewing market share during the World Cup}

Revenue from ITV Studios, which has been a star performer in recent quarters, was up by only 2pc, to £402m. Mr Crozier has made expanding in-house production and selling the resulting content rights a strategic priority to shield ITV from fluctuations in the advertising market. In May he spent £212m on an 80pc stake in Leftfield Entertainment, the American producer of reality shows such Real Housewives of New Jersey.

Mr Crozier said: “Looking forward we expect good growth in ITV Studios in 2014, driven by our acquisitions. We will continue to rebalance the business and grow new revenue streams, both organically and through acquisition.”

ITV said it had secured more firepower for acquisitions. Its new revolving credit facility of £525m is more than double its previous deal.

The increasingly international spread of ITV Studios meant its finances suffered as a result of the strength of sterling, which is expected to wipe hundreds of millions of pounds from the bottom line of British exporters this week. ITV said the strong pound will wipe off up to £30m in revenue and up to £8m in earnings over the full year.

The continuing recovery of ITV in the fourth year of Mr Crozier’s five-year plan allowed the board to commit to 20pc growth in the annual dividend for each of the next three years.

ITV shares were flat in early trading in spite of the strong showing. They have risen sharply in the last two weeks, however, on speculation of a takeover by Liberty Global, the owner of Virgin Media, which bought a 6.4pc stake in the company from BSkyB.

Paul Richards, an analyst at Numis, said the move had added “speculative spice” to ITV’s valuation.