At a presentation of Granada's interim results today, Staunton told sportbusiness.com: “We expect about 33 per cent of ITV Digital’s viewers to have subscribed to ITV Sport by 2002/3. This should generate £120 million ($166 million) that year, about the same price we will have to pay for our sports rights. By 2003/4, with more subscribers to the channel, ITV Sport should recover the £150m ($208m) spent on it by Granada and Carlton."
Neil Blackley, a senior media analyst at Merrill Lynch, previously told sportbusiness.com that ITV Sport is unlikely to move out of the red until 2006/7.
Granada’s chief executive Steve Morrison said there is a huge pool of customers who will subscribe to ITV Sport: “Only 40 per cent of soccer fans have subscribed to pay-TV. There is therefore a huge audience out there for us to attract. Obviously some of these potential customers will chose to subscribe to Sky Sports, but we are confident that we will gain most of these new customers because we are offering such an exclusive sports channel,” he said.
ITV Sport will have coverage of the Nationwide and Champion’s League soccer. ITV Digital (currently called ONDigital) will screen over 150 live football games and will also package 40 pay per view Premier League games. ONDigital has just over one million subscribers and needs 1.7 million to break even. Sky boasts over 5m customers.
Executive chairman Charles Allen said some sporting events such as the Formula One grand prix would be shown on both ITV’s free-to-air channel and its digital channel. “There are obviously some games and tournaments which we are committed to show on free-to-air television. But this won’t stop us showing the same match or event, with additional coverage and comments, on our pay-TV channel too.”
Manchester United Television (MUTV), run by Granada, BSkyB and Manchester United soccer club, is also expected to get a much needed ratings boost next season when its starts showing delayed action rights to all Premier League games involving Manchester United. Granada will also be investing more money in the broadband interactive websites for Arsenal and Liverpool soccer clubs.
A 5.4 per cent fall in net advertising revenue (NAR) for the six months to March 31 was blamed for a fall in half-year pre-tax profits to £112m ($155m) from £125m ($173m). NAR for July is expected to be down a staggering 17-18 per cent year-on-year. Merrill Lynch predicted that advertising in July would be significantly lower year-on-year at ITV because the Euro 2000 championships last year generated a significant amount of advertising revenue for the channel.
But while advertising fell, sponsorship rose by eight per cent to £12m ($17m) during the half year, thanks to a £50m ($69m) deal with Coca-Cola who will sponsor ITV’s Premier League soccer coverage for the next three years. “We have created broad-based media packages to offer greater value and exposure to advertisers,” said Morrison.
As part of a cost-cutting exercise, Granada will restructure its business from four into just two divisions centred on platforms and content. All of its existing free-to-air and ITV pay television assets, including ITV Sport, will be managed within the platforms business and its production online and broadband assets will be managed within the content business. Granada said it was looking for a new managing director for its platforms business and confirmed that a number of senior executives would be made redundant from the reshuffle.
