ITV's pushes for revenue diversity with paid content, production focus

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Jasper Jackson, TheMediaBriefing Experts' Blog, Broadcast

Why is ITV so keen to talk up the performance of its production and online gaming businesses? It's because the broadcaster - like many other companies across the media - is trying to decrease its reliance on a fickle ad market. 

The second paragraph of ITV CEO Adam Crozier's statement on the broadcaster's 2012 results talks about the growth of "non-advertising revenue" and the segment is the second set of figures listed in the earnings release - just below total external revenues. 

Release | Earnings (PDF)

Of course, the TV ad market has remained strong globally despite economic fluctuations. While other ad markets - especially print - have been hit by cyclical factors and the shift of ad dollars to the internet, TV remains by far the largest ad market and TV viewing shows no sign of tailing off. 

Yet a look at the key stats from ITV's full-year results shows why the firm is so keen to build direct non-ad related revenue streams. 

-- Ad revenues: National advertising revenue (NAR) for ITV channels was flat during the year, despite the impact of the Olympics and Euro 2012. That was actually better than the TV ad market as a whole, which was down 1 percent. 

-- Online, Pay & Interactive: Of the two key areas of non-national ad revenue ITV operates in - ITV says it was Online, Pay & Interactive that drove overall growth across the company - growing 22 percent to 26 percent to £102 million. Some of those revenues will be derived from iPlayer advertising - but the firm is also pushing its pay TV option heavily. 

-- ITV Studios: Total revenues were up 16 percent year-on-year to £712 million. ITV has  acquired production companies in the US and UK and is investing in the division heavily.

The key point for ITV is that non-advertising revenues now account for £1 billion in revenues - up 12 percent year on year. That's around two fifths of the firm's total £2.5 billion total annual revenue (and a bigger proportion of external-only revenues of £2.2 billion) and gives it a healthy income that isn't  directly related to the healthy of the ad market and thus the economy as a whole.  

ITV is still at its heart an advertising company, but the more it can reduce its dependence on advertising, the less susceptible it is to economic fluctuations and the more control it has over its future. That's a fact many other media companies are becoming increasingly aware of. 

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