Can ITV’s Michael Grade improve ITV’s Grade?

Mr. Michael Grade, ITV’s head honcho announced that ITV had made a turnaround even though UK’s largest broadcaster posted a 35% decline in its full year profits. ITV posted revenues of 2.08 billion pounds in the year 2007 as against 2.18 billion pounds, which ITV had posted in the previous year and this translated into a 5% drop in revenues, which the broadcaster has blamed due to a fall in revenues in the premium rates due to the TV scandals such as the scandal in voting in TV and the cheating in game shows in the previous year.

Even the profits before tax were down from 288 million pounds in the year 2006 to 188 million pounds in 2007. So, even though some shows such as the ‘Drama Kingdom’ and ‘I’m a Celebrity, Get me out of Here’ managed to entice more viewers to the advertisers, ITV’s income from other premium shows went south by 58 million pounds as compared to 2006. However, according to Mr. Michael Grade, ITV was aiming to improve its performance in the current year and maintained that ITV’s plan for a turnaround, which was announced in September 2007, was “on track”. ITV’s other shows such as ‘Primeval’ and ‘Britain’s got Talent’ also lured in more viewers and so did their other channels such as ‘Citv’, the kid’s station as also ITV1.

However, it was much below the 1.2 billion pound income projection, which ITV had set upon to generate by the year 2012. In fact income declined to 564 million pounds as independents had to be roped in for new shows and outside commissions were also cut due to a high turnover by high ranking staff. ITV also noted that there was still a possibility for their content division to improve and that their income had gone down since ITV and other channels in the UK could not get “sufficient and consistent commissions”.

Mr. Michael Grade described the past year as the turning point for ITV and also that due to their better on screen performance, they had busted the myth that ITV was heading south. This statement was backed up by at least the stock prices of ITV, which went up by 0.9p to touch 67.4p in spite of the fall in revenues and also after falling 40pc in the previous six months.

The rise could be attributed to Mr. Grade’s confident statement that there was no indication of any downward trend in advertising in the current year.

He also said that ITV’s income could be up by around 2pc in the first 3 months of the current year and ITV1’s advertising income could fall by only half a point. His term as an executive chairman till the year 2010 was also approved by the board of directors.

He was also confident that ITV1’s new drama shows in 2008 such as ‘Moving Wallpaper’, ‘Echo Beach’ and ‘Honest’ and their entertainment shows such as ‘Harry Hill’s TV Burp’ and ‘Dancing on Ice’ could bring in the required income in 2008.

ITV has also maintained its dividend at 3.15p after the payment of its final dividend of 1.9p, which will be paid on the 1st of July. Mr. Grade also said that even though ITV had seen a fall of 10% in its income in the previous year, if compared to 2006, where it had seen a 12% decline, the broadcaster had only lost 4%.

So, it remains to be seen if Mr. Grade’s prediction for the current year and his turn-around policies together can make the biggest broadcaster rake in additional revenues and whether the board’s decision to extend his term can really make ITV pass the grade.