Broadcaster ITV has jettisoned the social network business Friends Reunited, but is seeing major improvements to its online business. Friends Reunited was sold today for £25 million to Brightsolid, a division of publishers DC Thomson. ITV paid £175m for Friends Reunited, it reported an increase in online revenues of six per cent.
ITV acquired Friends Reunited in 2005 and commentators have said from the beginning that there was no real business case for the acquisition. Friends Reunited was sold this morning just before the company announced its half yearly results.
In the first half of 2009 ITV achieved savings of £57m across the business and says it is on course to achieve cost savings of £155m by the end of the year. In 2010 ITV aims to deliver cost savings of £215m and £285m in 2011. It said the costs savings are mitigating "the impact of market weakness" as a result of the credit crunch and resulting cuts in advertising. Operating cash flows at ITV increased by £51m to £168m in the first half.
A saving grace for ITV is its online revenues, up by six per cent to £18m. The ITV.com site saw revenues increase 100 per cent to £10m and its online video service that allows consumer to watch missed and archived content saw video views rise to 116m. Unique users of the ITV online sites increased to an average of 8.7m per month, up from six million for the same period last year.
Richard Cross, CIO at ITV, is at the heart of cost reductions at ITV, he explained to CIO UK that using off the shelf software and hardware and increased outsourcing is delivering results. Since becoming CIO Cross has outsourced application, desktop and network support as well as transmission of its shows.
"The key thing was to find growth through more efficiency: as IT, we are part of both, we drive efficiencies through IT and drive revenue through technology such as the web and mobile," Cross said. "On the efficiency side, we have already done a lot to get more production done on PCs rather than in edit suites. An example of innovation is the way we are using artificial intelligence to predict audiences and to place the right advertisements in front of them.
"There is a lot of pressure on media companies to take risks and move ahead with things that they have been thinking of, but have not got to," Cross (pictured) says of the wealth of content types and platforms available online today. "Turnaround is focused around content and content -exploitation, and we are still one of the -biggest content providers in Europe."
ITV reported a pre-tax loss of £105 million for the first half of 2009. For the same period in 2008 ITV reported a loss of £1.5 billion. Due to the credit crunch it has seen advertising revenue drop by 15 per cent, but points out that overall the market has seen advertising fall by 17 per cent.
Read the full interview with Richard Cross, ITV CIO here.