ITV to reinstate dividend after ad market recovery

British broadcaster ITV plans to restore its dividend in July after a recovery in advertising markets and improved programming helped double 2010 earnings and deliver a strong start to the new year.
ITV said on Wednesday it had not yet decided on the payout level as it remained cautious on the economic outlook and has work to do to improve areas of the company, including its online output and creative division.
Shares in the group, home to such shows as Simon Cowell's X Factor and long-running soap opera Coronation Street, were up 5% to 90 pence, valuing the company at 3.6 bln pounds and improving its chances of making it into the FTSE 100 when the blue-chip index is reviewed on March 9.
"Whilst the recovery in television advertising, which is now back to 2006 levels, is clearly very helpful, it also serves to remind us just how volatile the market can be," chief executive Adam Crozier said.
"And that is why we remain fully focused on delivering our five-year transformation plan to ensure we have a more balanced and robust business going forward."
Crozier, who joined the broadcaster last April, has been scathing about its previous strategy and wants half ITV's revenue to come from non-advertising sources such as pay-TV, sponsorship, content creation, online income and product placement.
On Wednesday, he said he was pleased with the popularity of a number of programmes, including Downton Abbey and other dramas, but said the ITV Studios division which created and sold content needed to improve further.
ITV studios revenue fell 13% to 293 mln pounds.
Analysts welcomed the above-consensus 2010 figures, increased cost savings, lower tax and debt levels and strong advertising performance but noted the company's comments that comparatives would get harder as the year progresses.
"ITV is benefitting from the tailwinds of a remarkably strong recovery in advertising," Jefferies analyst Nick Bell said. "However, as the company notes, net advertising revenue comparatives are getting together.
"April — boosted by late Easter and the Royal Wedding — is not as strong as the 20 percent increase some commentators have been suggesting."
Others said they expected ITV to outperform the ad market and benefit from regulatory changes.
Net advertising revenue rose 12% in the first quarter and it is expected to be up by between 8 to 12% in April.
ITV said the overall improvement in trading helped it to post earnings before interest, tax and amortisation of 408 mln pounds from 202 mln in 2009.
Revenue was in line with forecasts at 2.06 bln pounds, up 10%, while adjusted pretax profit of 321 mln pounds was up nearly 200%.