ITV to restart dividend after 2-year hiatus
ITV will unveil plans to restart its dividend this week, thanks to a revival in the advertising market.
Adam Crozier, the broadcaster’s chief executive, will on Wednesday say he expects to restart the payout, ending a two-year hiatus for the firm’s shareholders.
Analysts expect the firm to have almost tripled its pre-tax profits to £300m, after advertising rebounded strongly in 2010 thanks to the World Cup.
However, Crozier will caution against too much optimism at this stage, pointing out that advertising sales are still only back to the levels seen in 2006.
And he will warn that the group is likely to come up against much tougher comparatives from the second quarter onwards, when last year’s World Cup boosted revenues. However, the Royal Wedding in April is likely to lead to a smaller fillip.
Crozier will also underline the need for massive structural change at the broadcaster, which is still heavily dependent on advertising revenues from free-to-air channel ITV1.
A source close to the firm said: “A return in cyclical advertising doesn’t undermine the need for structural change. If anything, it underlines it.”
Lorna Tilbian, media analyst at Numis, says she expects the firm to expand into Pay TV in a bid to wean itself off ITV1’s advertising sales. She also forecasts the group will be debt free by the end of 2011.