ITV heralds return to strength with special dividend

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By Kate Holton

LONDON, March 4 (Reuters) - The British broadcaster ITV declared victory in its transformation plan on Wednesday, returning cash to shareholders after strong international growth and new revenue streams helped it to beat 2014 profit forecasts.

Adam Crozier took over the top job at ITV (LSE: ITV.L - news) in 2010 when Britain's biggest listed free-to-air broadcaster was on its knees, buffeted by the fluctuations of advertising markets and haemorrhaging viewers to the higher quality programming coming from the publicly owned BBC.

Asked to restore the company to its glory days of the 1990s, Crozier set about expanding its production business, developing new online platforms and improving the quality of its programming.

On Wednesday, the home of the period drama Downton Abbey said it would mark the improvement with a 250 million pound ($383 million) special dividend and a 34 percent hike in the full-year dividend, sending its shares up 4 percent.

The stock is now up more than 240 percent since the 51-year-old former Royal Mail (LSE: RMG.L - news) boss took over.

"Management is declaring victory on its five-year transformation plan," said Hargreaves Lansdown (LSE: HL.L - news) analyst Keith Bowman. "A more balanced business, less reliant on volatile advertising revenues and the UK, has been created, with the next phase of its strategy now being pursued."

Of ITV's various revenue streams, the online, pay and interactive division was up 30 percent to 153 million pounds and the ITV Studios business grew by 9 percent to 933 million pounds, with almost half the revenues from that division coming from outside Britain.

Total (Swiss: FP.SW - news) net advertising revenue was up 6 percent to 1.6 billion pounds, while revenue from non advertising sources rose 10 percent to make up 45 percent of total revenue. ITV's total external revenue for 2014 was 2.59 billion pounds.

ITV also said it had started 2015 well, with net advertising revenue forecast to be up 11 percent in the first quarter, and up 4-7 percent in April.

The one weakness within the results was the group's share of viewing, which fell in 2014 after rising in 2013. ITV said this was in large part due to a weaker performance from its main ITV1 channel.

Crozier told reporters that ITV's linear broadcast television had held up well, but had struggled to keep up with the BBC, which he said had outspent its competitors. ITV plans to increase its total network programme budget by around 20 million pounds to 1.040 billion pounds to counter this trend.

In total, full-year pretax profit was up 23 percent to 712 million pounds, compared with a forecast of 681 million pounds according to Thomson Reuters data.

($1 = 0.6519 pounds) (Reporting by Kate Holton; editing by Sarah Young and Kevin Liffey)