Resurgent ITV quashes talk of takeover approach

Broadcaster pays special dividend of £156m after its profits soar for a third year
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The Independent Online

ITV has rewarded investors with a £156m special dividend after a third year of rising profits, capping a major turnaround, but the broadcaster disappointed some in the City by saying it had received no takeover approach.

Pre-tax profits jumped 6 per cent to £348m, with turnover up 3 per cent to £2.2bn, thanks to a record performance from its programme-making arm, ITV Studios.

ITV's shares have soared in recent months on the strength of bid speculation, fuelled by the United States cable operator Liberty Global's $23.3bn (£15.4bn) bid for the pay-TV firm Virgin Media. However, Adam Crozier, chief executive, quashed talk about ITV receiving any takeover approach, saying: "I'm supposed to say we never comment on stuff like that, but the answer is no."

The shares, which initially rose after this morning's results, fell after his comments, ending down 1.2p at 119p.

Mr Crozier has upped the annual dividend from 1.6p to 2.6p, as well as handing out the special divi, worth 4p a share. BSkyB, ITV's biggest shareholder with a 7.5 per cent stake, will be the biggest beneficiary, collecting about £19m. The payout marks a huge turnaround: ITV racked up a £2.7bn loss in 2008.

"We've had terrific growth at ITV Studios," Mr Crozier said, referring to how its revenues rose 16 per cent and profits surged by almost a third to more than £100m, helping to offset a tough advertising market. ITV Studios increased the number of shows it sold overseas by 47 per cent, with the mini-drama series Titanic being bought in 160 countries and the Edwardian drama Mr Selfridge being snapped up in 35 countries.

In contrast, ad revenues were flat at ITV's bigger broadcasting business, which operates its family of channels, including ITV2, ITV3 and ITV4. Mr Crozier blamed an "unprecedented number of major one-off events" such as the BBC's Olympics coverage.

Since he joined from Royal Mail in 2010, Mr Crozier has made the development of ITV studios a priority as he wanted to own more intellectual property and sell it, rather than buying in hits such as X Factor from other firms. He also wanted to reduce reliance on advertising.

The online, pay-TV and interactive division has also started to gain traction, with revenues up 26 per cent to £102m. Mr Crozier said digital revenues can be "highly profitable", with margins sometimes approaching 60 per cent.

ITV has a £200m surplus after Mr Crozier slashed net debt. He said all this demonstrates that his transformation plan is working, by making ITV a "more balanced business", after it did not pay a dividend between 2008 and 2011.

He expects sales at ITV Studios to grow this year after making acquisitions, including Graham Norton's firm So Television and other production companies in America, Israel and the Nordics. Advertising is up 5 per cent in the first quarter.

He said a dividend was better than a share buyback: "We wanted to reward all the shareholders equally and those who were staying with us rather than those who wanted to get out."