ITV makes £105m first-half loss as it splits from Friends Reunited

LONDON - ITV, which today agreed to sell its Friends Reunited business to DC Thomson for £25m, has reported a £105m pre-tax loss for the first half of 2009.

The loss was made after the company suffered a 12% drop in revenues to £909m, which meant it also registered an operating loss of £15m.

ITV is continuing to be buffeted by a weak television advertising market, and expects its third quarter ad revenues to be down around 12% year on year.

TV ad revenues during the first half of the year dropped 15% to £615m, compared to a 17% drop for the overall market.

Global content revenues rose by 4% to £296m and online revenues rose by 6% to £18m.

The company today agreed a deal to rid itself of Friends Reunited, which had been its great online hope in 2005 when it paid £175m for the business.

If the deal is cleared by the competition authorities, DC Thomson-owned Brightsolid will pay ITV £25m in cash for the social networking, dating and genealogy business.

Brightsolid owns online business Findmypast.com, which operates the official 1901 and 1911 census websites.

It is likely it would combine this with Genes Reunited, the Friends Reunited family history site, which is in one of the fastest growing areas of social networking.

There was no news from ITV on its hunt for a new chief executive, other than it is expected to result in an appointment before the end of the year. HMV group chief executive Simon Fox is currently the favourite to land the role.

Although the company suspended its interim dividend in a bid to conserve cash, its share price this morning rose 4.8% to 44p.

Michael Grade, the executive chairman, sounded a hopeful note in the company's statement.

"Into the second half, we have a strong autumn schedule and will deliver further substantial cost savings. While UK television advertising remains down year-on-year, the rate of decline has eased and ITV continues to outperform the market.

"With a lower cost base and high gearing to UK television advertising, ITV is well placed to capitalise on any stabilisation in the market and to fully exploit the content we create and broadcast as and when economic conditions improve."

Andy Viner, head of media at BDO Stoy Hayward, said the results were "respectable" but criticised the company for being slow to adapt to changes in media consumption.

"ITV remains a fairly traditional business model which is heavily reliant on the UK advertising market. The way in which consumers are consuming media is changing rapidly in a global landscape, with digital technology increasingly critical.

"ITV's results are short on how it will explore this changing landscape and will need to conclude further non core asset sales such as SDN to generate cash for reinvestment whilst needing to repay €232 million of bonds in October 2011 as it seeks to rebuild its balance sheet.

"ITV desperately needs new blood and new ideas to evolve from a traditional broadcaster and exploit growth opportunities from different platforms using new media. There are some interesting areas to explore - from pay-per-view to charging for additional online content.

"The new CEO will need to have plenty of talent - the challenge will be to embrace a changing landscape and develop a new strategy in order to lead the company away from the old world of broadcasting into a digital-led era."

Daniel Farey-Jones recommends

Friends Reunited

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