A double whammy of bad news from ITV this morning: as well as reporting a loss of £105m for the first six months of 2009, the broadcaster has just agreed to sell the Friends Reunited website to Beano publisher DC Thomson for £25m – £145m less than it paid for it four years ago. ITV boss Michael Grade was keen to stress that the deal happened before his watch, so it wasn’t his cock-up. But at a time when he’s still struggling with a massive fall in TV ad revenue and a spiralling pension deficit, it’s very much his problem – at least until ITV can get his successor in place…
On the plus side, ITV's first-half loss of £105m was a considerable improvement on the £1.5bn it lost this time last year (when it wrote down the value of its various broadcasting divisions). And although ad revenues were down 15% or £108m, leading to a 12% drop in overall sales, this was at least slightly better than the average – overall TV advertising was down 17%.
No such luck with the pension deficit, however. In the last six months this has trebled from £178m to £538m, thanks to shrinking asset values and higher inflation assumptions – forcing ITV to start talking to its trustees about ways to cap its liability. It pumped in over £30m in cash during the period (which presumably it could have done with elsewhere) to try and plug the gap, but the shortfall is growing. And since its pension scheme is about half as big again as its current market value, this will continue to be a problem for some time to come.
The Friends Reunited sale (which was concluded so late last night that it didn’t even make it into the original results statement) is also pretty embarrassing, since it means ITV has taken a serious bath on one of its most high-profile recent investments. ‘ITV bought it, but this management team did not buy it,’ Grade huffed today, basically arguing that he was trying to make the best of a bad job. The buyer is Brightsolid, DC Thomson’s genealogy division – a clear sign that the Genes Reunited site is now the valuable bit of the business (does anyone still use Friends Reunited itself?).
Still, at least Grade got a higher price than expected. His viewing figures are also holding steady, thanks to the likes of Britain’s Got Talent. And there are some signs that the advertising slump is bottoming out, with ITV forecasting an improvement in the second half. So whoever they get in to replace Grade should have a slightly easier time of it...
In today's bulletin:
Bank of England shocks by pumping in an extra £50bn
ITV slumps again - and takes £145m hit on Friends Reunited
Unilever's brands are back - but not P&G's
Carpetright turns it around as bed gamble pays off
Decisions: Marcia Kilgore of Soap & Glory and FitFlop