Crozier thinking outside the box

ITV's chief executive Adam Crozier is in the middle of a five-year mission to transform the broadcaster. Gideon Spanier assesses progress

When Adam Crozier got the top job at ITV two years ago, he signed up for a pay and bonus package said to be worth up to £15m if he could pull off a five-year turnaround. Nearly two years in, Mr Crozier says he is making "good progress" on that transformation after yesterday reporting a 14 per cent rise in annual pre-tax profits to £327m. So he ought to be hitting at least some bonus targets.

Click HERE to view graphic

On the basis of the balance sheet, Mr Crozier and the chairman, Archie Norman, who recruited him, can claim that ITV is in far better health. ITV has swung from net debt of £612m at the start of 2010 to a surplus of £45m. A canny deal over its pension and bond buybacks mean that the Downton Abbey and Only Way Is Essex broadcaster is "cash positive", fuelling talk of possible acquisitions.

Revenues last year rose only 4 per cent to £2.14bn yet ITV was able to bank fatter profits thanks to its stronger financial position. On an adjusted basis, before exceptionals, profits surged by a quarter.

Advertising was virtually flat – up 1 per cent last year – but the programme-making arm, ITV Studios, is finally fulfilling some promise as it sells more shows to other broadcasters. It's all part of Mr Crozier's masterplan to make more money from programming content, pay TV and online – and reduce dependence on volatile advertising.

Non-advertising revenues rose 11 per cent because ITV sold more shows such as Come Dine With Me to Channel 4, White Van Man to BBC3 and the new drama Titanic, written by the Downton screenplay writer, Julian Fellowes, to 86 countries.

Mr Crozier was also able to announce a full-year dividend of 1.6p – the first payout to shareholders for three years. It sent the shares up almost 7 per cent, or 5.45p, to 85.95p.

However, ITV is still below the 95p level it hit exactly year ago on results day. That suggests Mr Crozier still has plenty to do. As the five-year share price graph shows, ITV is still below pre-recession levels seen in 2007 under its previous boss Michael Grade.

Mr Crozier set four key targets in his 2010 transformation plan. These were: create a new, lean fit-for-purpose organisation; maximise audience and revenue share from existing TV channels; expand through free and pay models across new platforms such as online, mobile and cable TV; and build a strong international programme-making business. Judged by those four criteria, Mr Crozier's record is mixed.

In terms of making the organisation fit for purpose and selling programmes, he has made some clear progress. The programme-making arm won 111 new commissions during 2011, up 28 per cent, and 45 of those were from international buyers. It makes good sense for ITV to expand its own production hub as it keeps hold of the intellectual property, rather than relying on external producers such as Fremantle, maker of X Factor and Britain's Got Talent, or Carnival, which produced Downton Abbey.

However, on two other key measures – improving audience share and increasing revenues from new media platforms – there has been less success.

Audience share for the flagship channel, ITV1, fell 2 per cent last year, which Mr Crozier admits is "disappointing". He blames weaker ratings for X Factor and Coronation Street at the end of last year, and says, only half-joking, "there wasn't enough snow" so fewer people stayed at home to watch television compared to December 2010.

On the plus side, the digital channels ITV2, ITV3 and ITV4 continue to grow, and Mr Crozier maintains that ITV is outperforming the wider ad market. However, the breakfast show Daybreak remains without any permanent presenters after Adrian Chiles and Christine Bleakley were axed in December. The new game show Red or Black was also a flop. He admits that ITV needs to "step up" with a new entertainment hit, as I'm A Celebrity and Dancing On Ice have been around for a long time.

Arguably, making money from new platforms such as online and pay is ITV's biggest weakness. Online revenues were £34m against £28m a year earlier – just 1.5 per cent of turnover.

ITV has been woefully slow to start charging for online content, while new entrants such as the US website Net Flix rush in. Mr Crozier said last summer that he planned to begin charging online micropayments by the start of 2012. Now he admits that the launch of the ITV "Pay Player" won't happen for many more months, with internal testing only due to begin in June. He blames poor technology that he inherited.

Mr Crozier insists he is still making progress: high-definition versions of ITV2, ITV3 and ITV4 are on pay-TV – although he won't say how much that makes. ITV has belatedly become available on Apple and Android phones and on computer games consoles. And it should also make more money when it renegotiates long-running deals with Virgin Media and BT, which don't carry advertising around ITV's on-demand content at present.

City analysts are backing Mr Crozier as they forecast higher profits for 2012, despite the ad market looking flat again in this Olympics year. There's a third series of the ratings blockbuster Downton Abbey to come, and another new, high-end drama series, Mr Selfridge, an adaptation of Lindy Woodhead's history of the department store and its late boss Harry Gordon Selfridge.

Some say Mr Crozier should make a big acquisition to transform the business. The Big Brother production firm Endemol, which has a big international presence, could fit the bill, but he maintains he doesn't think it's for sale.

Instead he is focusing on organic growth and talking about the possibility of expanding overseas by launching an ITV channel in several unnamed overseas countries. Mr Crozier can justly argue that ITV has its destiny in its own hands.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project