ITV successfully stretch from the core
TV channel ITV* have just announced another good year's performance, with an 18% in pre-tax profits to £780million. Since Adam Crozier joined as CEO back in 2010 profits have more than trebled, revenue is up 60% and the share price is up 200%. All this at a time when social media hype suggested that TV was dead in the water.
[* For non-UK readers, ITV is the biggest "terrestrial" commercial TV station in the UK. For many years it was one of only 3 main TV stations, alongside BBC1 and BBC 2]
One of the key ways that Crozier has driven growth in through smart stretching from the core. He has done this in such a way that the brand stretching has strengthened the core, not through the often talked about "halo image effect", but by enhancing the business model.
An important first step in ITV's revival was to define what business they were in, by re-focusing on content creation. The vision was defined as: "To create world class content which we can make famous on our channels, before exploiting its value across multiple platforms, in the UK and internationally."
What I love about this vision is that it is an ambition that drives a business model.
1. "Create world-class content…"
Having put content at the heart of the business transformation, the company set about rebuilding the ITV Studios production division. The division was so depleted when Crozier joined that investors urged him to abandon production entirely. Instead, he revived the business in three ways. First, he built on the popularity of family favourites such as Coronation Street. Second, new shows such as Jekyll and Hyde were created in-house. Third, it bought small, independent producers such as So TV, which makes The Graham Norton Show.
The studio business is an important business in its own right. Non-advertising revenue has grown from £340million in 2010 to £1.08 billion in the year to March 2015.
The stream of new programs from ITV studios has helped rejuvenate the core TV station business, with programs like the drama Broadchurch and reality TV hit I'm a Celebrity, Get me out of Here. This has grown the channel's long-term share of viewing, although it was down slightly last year (15.6% vs. 16.0%). Advertising revenue has grown almost 50% in five years to £1.88 billion.
3. "…before exploiting its value across multiple platforms"
ITV has opened up new channels in two main ways. First, it has sold programs to international markets, especially the US. For example, Mr Selfridge has been sold to 150 countries. Second, the company has grown its presence in online and interactive broadcasting, including ITV Player.