Carlton Communications Plc held its Annual General Meeting in London today. Michael Green said:
2000 was a year of transition for Carlton. We agreed the sale of our Products and Technicolor businesses. We initiated the consolidation of ITV, acquired HTV and won the sales contracts for Scottish Television and Grampian. Gerry Murphy joined as our Chief Executive Officer. Carlton is now a highly focused media company with businesses in free and pay television, programme making and distribution, interactive television and the internet.
Our strategy is clear: to grow our media assets and maximise their value. We are looking at opportunities to invest in our businesses and expand in media, including partnerships with North American and Continental media companies, such as our co-operation agreement with Thomson multimedia.
The UK television advertising market is currently subdued compared to last year’s buoyant levels. We believe that a resumption of like-for-like growth is unlikely before the fourth quarter of Carlton’s financial year. ITV’s advertising revenue in the first four months of our current financial year was 5 per cent lower than last year.
The longer term outlook remains encouraging. Companies need to build stronger brands as product life cycles shorten. ITV gives them fast access to a mass audience. Interactive advertising offers an important new opportunity for television to gain a greater share of the total display advertising market. ITV’s first interactive advert is going out today, on Carlton.
ITV’s aim is to beat its free-to-air rivals decisively in peak time and maintain its position as the most popular channel in multi-channel homes. The ITV schedule has made a strong start to calendar 2001, with an average peak time viewing share of 38.6 per cent in the first seven weeks – 1 share point up on last year and almost 12 percentage points ahead of BBC1.
ITV’s peak time viewing share in multi-channel homes is 32 per cent, a lead of 9 percentage points over the BBC and significantly ahead of the commercial competition, including Channel 4 (5 per cent), Channel 5 (4 per cent) and Sky One (4 per cent).
Carlton is making steady progress in building its programme making operations. Crossroads begins this month – twice a day, five days a week – and Survivor will be broadcast in the summer. Carlton International, a leading European distributor of television programmes and films, is benefiting from the successful exploitation of the Thunderbirds brand.
Carlton Screen Advertising – the UK’s market leading cinema advertising business – is bringing new advertisers like Orange to the big screen, in search of sought-after young audiences. We also look forward to developing our cinema advertising business in North America.
In 2001, investment in digital media, excluding interest, is likely to be at a broadly similar level to 2000. Additional investment in ONdigital, as subscriber numbers grow and ONnet increases its penetration, will be partially offset by lower investment in digital channels. Carlton now has a 50 per cent interest in TasteNetwork, our joint venture with Sainsbury’s, as well as Carlton.com our wholly-owned entertainment portal.
Michael Green concluded:
The challenge for Carlton in the year ahead is to build on our strong assets in UK commercial television. In the current year we are on target to book close to GBP1 billion of advertising revenue, invest over GBP200m in new television production and make secondary and international sales of television programmes and other properties of GBP80m. We are partners in Britain’s most watched television channel and an interactive pay television platform with 1 million subscribers and rising.
While the television advertising market faces challenging comparatives with last year, we have a strong platform from which to grow our businesses and add long term value for shareholders.
