Pay-TV switch would boost ITV, say analysts

ITV should consider changing to a subscription model to boost revenues, according to analysts, as new research found that 40 per cent of terrestrial households would switch to pay-TV if it moved away from free-to-air.

The group has struggled in the downturn, as its model has suffered from the global collapse in advertising. Daniel Kerven, analyst at UBS, said there was little upside even after a recovery and "given ongoing structural pressures, we have suggested that it should consider migrating to a subscription model".

UBS commissioned a consumer survey from Gfk NOP, a market research group, into pay-TV trends. The survey found that 24 per cent of non-pay homes would be more likely to subscribe if ITV 2, 3 and 4 were only available on Sky and Virgin, and up to 40 per cent when ITV1 was included.

The survey also found a third of households with terrestrial television plan to move to pay-TV "in the future". UBS said the survey showed a "wider consumer acceptance of pay-TV" with subscriptions expected to hit up to 68 per cent, up from 60 per cent in previous surveys. Mr Kerven expects pay-TV "to eventually become the norm".

The survey will come as a boon to subscription providers including BSkyB, Virgin Media and Top Up TV. "Despite the tougher economic environment, the intention of pay-TV customers to turn is lower than it was two years ago for both Sky and Virgin," Mr Kerven said.

Sky recorded a 4 per cent rise in operating profits last year to £780m, with the strongest net growth in new customers for five years. It has also seen strong growth in its High Definition services, which attracted 1.3 million customers last year.