ITV launches pay-TV push as Crozier goes for growth

ITV has decided to start charging for some of its programmes as part of a five-year turnaround plan to wean the broadcasting group off its dependency on advertising.

The group's new chief executive Adam Crozier revealed ITV had signed a pay-television deal with Sky to launch high definition versions of its most successful dramas and entertainment shows such as X Factor.

He said: 'Pay television has seen continual growth over the last decade and this deal is a great example of how a new, subscription-based launch, can complement ITV's existing free-to-air channels.'

Crozier - the former chief executive of Royal Mail and boss of the FA - also announced a far-reaching five-year plan to build the business as the group reported better-than-expected profits and a sharp reduction in its debt.

The moves are an acknowledgement by ITV that it has failed to keep pace with the rising competition from the internet, the continuing growth of pay TV and subscription services and must now take up the challenge.  

There was some good news as ITV reported an operating profit of £165 million for the first six months of the year and said net debt had been cut by £175 million to £437 million.

ITV grew advertising revenue by 18%, faster than the market average, as a result of the World Cup. However, it warned growth would slow in the third quarter. ITV and said tougher year-on-year comparisons and uncertainty in the global economic backdrop mean it is cautious for the outlook for the fourth quarter and 2011.

The news failed to inspire investors and the shares fell back 1.6p to 51.95p.

Nick Bell, analyst at Jefferies said the new targets are 'strangely familiar' and Alex de Groote analyst at Panmure Gordon said 'the five-year transformation plan does not look striking.'

Crozier admitted the group has an awful lot to do in what remain difficult markets, saying 'we are under no illusion that ITV needs to change substantially.'