ITV demands even more advertising time as profits soar

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The Independent Online

ITV is to press regulators to be allowed more advertising minutes per hour in order to maximise the broadcaster's revenue earning potential.

ITV is to press regulators to be allowed more advertising minutes per hour in order to maximise the broadcaster's revenue earning potential.

The commercial broadcaster has also asked the regulators to allow it to charge for product placement in programmes.

News of the broadcaster's requests emerged after ITV reported a surge in profits and some revenue growth during 2004. The company trumpeted the performance of its new digital channels, the youth-orientated ITV2, and ITV3 - which is aimed at the over-35s - which it said made up for the audience lost by the main ITV1 channel.

ITV, which has already enjoyed a series of fillips from the easing of several regulatory requirements, emphasised there was a great deal further to go in terms of easing of regulations.

Charles Allen, the chief executive, pointed out that the newer multi-channel broadcasters were allowed nine minutes of ads each hour, compared with seven minutes at ITV1. "We want a level playing field," he said. He also pointed out that product placement was allowed in films and on US television.

"Product placement is allowed in movies, why not in original television programming? For instance, the deals that are done in Bond films over which car he drives. Viewers are sophisticated enough to know what is going on," Mr Allen said.

ITV faces 14 separate regulatory reviews between now and 2012, when analogue broadcasting will cease. The company hopes that each of these will lift historic restrictions on what it can do - as, by 2012, ITV's channels will just be a fraction of those available to all British households.

Last year ITV's pre-tax profits jumped 57 per cent to £340m, well ahead of City forecasts, while its revenues grew 3 per cent to £2.08bn. ITV shares topped the FTSE 100 risers, with a 4.4 per cent gain to 124.75p. Advertising revenue was up 4.7 per cent at £1.59bn, reflecting growth of 1.9 per cent at ITV1 and 76 per cent from ITV2, ITV3 and the ITV News channel.

Mr Allen said that two-thirds of the growth in broadcast revenue - which excludes the content sales business - came from non-ITV1 sources. These comprise the digital ITV channels, combined with interactive revenues and growth from GMTV, which is broadcast across the network in the mornings, and together they provided £59m increase in broadcast revenues, compared with a £28m rise at ITV1.

In 2004, the main ITV1 channel, which celebrates its fiftieth birthday this year, saw a 6.0 per cent fall in its share of commercial television viewers, mostly to digital channels. ITV2 grew strongly and ITV3 quickly established itself as one of the top multi-channel stations after it launched in November 2004. In multi-channel homes, between November and the end of January, all ITV channels increased their share of viewing of commercial channels in multi-channel homes, gaining 1.1 percentage points to 41.5 per cent. The company hopes shortly to launch a male-oriented ITV4.

ITV said a steep fall in the number of ITV1 viewers in January compared with the beginning of last year was due to the reality TV show, I'm A Celebrity ... Get Me Out of Here!, which attracted massive audiences in January 2004.

Lorna Tilbian, an analyst at Numis Securities, said: "We believe that ITV is delivering on its multi-channel strategy, with ITV2 gaining real traction and ITV3 running a year ahead of schedule. In advertising terms, this is translating into a much-improved relative performance."

ITV said that the current year had started well, with a 12 per cent rise seen in first quarter ad revenues. Mr Allen said that the second quarter would be weaker as the Easter festival falls in March this year.