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Turnover was £799.5 million (2001: £830.1 million) and profits were
£67.4 million (2001: £83.3 million).
Carlton’s television advertising revenues recovered to show an
increase of 2 per cent in the second half of the year, compared to the
same period last year. After a difficult first six months, year-on-year
growth resumed in May. For the year as a whole Carlton’s Net
Advertising Revenue ("NAR") was £660 million (2001: £695 million),
including a full year of HTV which was acquired at the end of October
2000. On a like-for-like basis the decline in NAR was 6 per cent for
the year.
ITV’s advertising performance continued to be influenced by the
penetration of multi-channel television and exposure to global brands
that were affected by the worldwide economic climate. Although
revenues in many product categories were lower than last year, cars,
cosmetics, pharmaceuticals and home entertainment were all higher.
ITV1’s share of total UK television advertising revenues for the year is
estimated at 54 per cent (2001: 57 per cent).
ITV’s programme schedulers have worked hard with advertising
sales to ensure that the strongest possible commercial schedules are
delivered to advertisers. The promotion of ITV has been a key priority
and a major conference, "TV Matters", was held to reinforce to the
advertising industry the unique power of commercial television to
connect with consumers. A follow-up study entitled "TV and the
Brain", which looked at why television is the most powerful advertising
medium, was presented earlier this month.
During the year, it became clear that the management structure of
ITV should be streamlined to improve its decision-making process and
that extra investment in the schedule was both needed and justifiable
in anticipation of a recovery in advertising demand.
Carlton Television’s Chief Executive, Clive Jones, was made Joint
Managing Director of ITV. Closer cooperation was introduced between
programmers and the marketing teams that led to an effective "ITV
Upfront" roadshow to promote and market the channel directly to
individual advertising agencies and media buyers this autumn. An
upbeat message of more drama, more entertainment and more
feature films in 2003 was well received by ITV’s clients. The launch of a
new on-screen identity for ITV and the appointment of Nigel Pickard
from the BBC as the new Director of Programmes were two further
positive developments at ITV.
One of the most important benefits of the proposed merger with
Granada will be to simplify ITV’s decision-making. For the first time, ITV
will be managed with a single set of objectives for the benefit of
advertisers, viewers and shareholders.
ITV1’s programme budget was boosted by an additional £25 million
lifting the total for the year to £773 million (2001: £735 million). This
investment contributed to an improvement in audience share in the
final quarter of the year. A further increase in the network programme
budget to £815 million has been agreed for the 2003 fiscal year, and to
almost £1 billion including local news and regional programming. This is
the largest programme budget of any single commercial channel in
Europe and demonstrates our confidence in ITV.
ITV1 remains the most popular peak-time channel delivering an
audience share of 32 per cent during the year, a 4 percentage point
lead over BBC1. ITV1’s average peak time share is almost 4 times
Channel 4’s, nearly 6 times Five’s and double all cable and satellite
channels combined – in fact greater than all of the other commercial
channels combined.
ITV1’s lead over its terrestrial commercial rivals is even greater in
multi-channel homes.
This reflects the popularity of ITV’s original, domestically-produced
programming compared to other commercial channels that rely heavily
on imported or repeated programmes.
Carlton’s share of ITV1 network schedule costs was £326.5 million,
an increase of 6.4 per cent before programme stock provisions of £6.5
million. Total licence fees (including digital satellite transmission costs)
fell to £111.1 million (2001: £119.5 million). This was due to lower
NAR and the effect of the increased penetration of digital television,
offset by an increase in payments following the renewal of the Carlton
Midlands licence and by the first year digital satellite transmission costs.
ITV2, 44 per cent owned by Carlton, is extending the ITV brand
in multi-channel homes. ITV2’s progress this year has been well ahead
of expectations and it enjoyed the biggest rise in popularity of any
channel in multi-channel homes. The number of brands advertising
on the channel has doubled and its revenues grew from £9.5 million
last year to £12.9 million, benefiting from its launch on digital satellite
last November. ITV2 is now available to nearly 50 per cent of the
population and achieved its highest ratings since launch with
extensions to top ITV1 shows such as Pop Idol, Who Wants To Be A
Millionaire and I’m a Celebrity…, as well as Champions League football.
Since September, ITV2 has been the second most watched nonterrestrial
channel and in early November started morning weekday
transmissions in response to rising demand from advertisers.
Carlton’s share of losses in ITV2 reduced to £7.2 million from £9.7
million last year and is expected to fall further as revenue growth
continues in 2003.
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