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Last Updated: Wednesday, 8 March 2006, 09:46 GMT
New ITV channel as profits rise
Simon Cowell, Sharon Osbourne and Louis Walsh
The X Factor is one of ITV's biggest recent hits
Commercial broadcaster ITV has reported a 36% rise in annual profits as it unveiled plans to launch a new "participation TV" channel.

Pre-tax profits rose to 452m ($785m) from 331m in the last year, with revenues up by 6% to 2.17bn.

However, the company said advertising revenues fell 3.3% to 1.46bn at its flagship ITV1 channel.

ITV, home to Coronation Street and the X Factor, said it planned to launch its new ITV Play channel in April.

Though advertising profits fell at ITV1, growth at ITV2 and ITV3 pushed overall ad revenues up by 2.7%. Operating profits rose 42% to 460m.

Unilever deal

More people in a multi-channel home are watching ITV this year than there were last year, and that's very good news for the future
Charles Allen, ITV chief executive

ITV, which was formed from the merger of Carlton and Granada in 2004, warned that its ad revenues were likely to decline by about 10% in the first three months of 2006.

This is partly because ad revenues were expected to be slow ahead of Easter and the World Cup football championship in June.

Meanwhile, the company announced a four-year deal with consumer products giant Unilever to buy 200m of airtime across its channels until the end of 2009.

ITV also announced plans to buy back 300m of shares, and raised its final dividend for shareholders by 38% to 1.8 pence.

Numis Securities analyst Paul Richards described the figures as a "good set of results".

"The market will like the buyback," he said.

Digital switch

ITV's flagship ITV1 channel has been battling falling ratings and advertising revenue as more households make the switch to digital TV.

It reported a rapid take-up of digital multi-channel television as an increasing number of channels became available to viewers.

"What's happening is we're in a transition phase from analogue to digital," chief executive Charles Allen told the BBC's Today programme.

"More people in a multi-channel home are watching ITV this year than there were last year, and that's very good news for the future."

Shares in ITV were up 2.2% at 113.5 pence on Wednesday morning.

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