ITV plc (LON:ITV)

CMD 2018

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Sep 19, 2018

Thank you, Jack. So thank you all very, very much for coming today, as Jack has just said, and welcome to our daytime studios. This is the GMB studio. And next door, we have this morning, Loose Women and Lorraine. You won't be hearing much from me today because it's really, really important today that you get to know and to see the quality of our senior leadership team. We have many of them presenting here today: Kevin Lygo, our Director of TV Steve Ford, our Director of Digital Product and Online Marketing Faz Aftab, Director of Platform and Distribution Kelly Williams, our Managing Director of Commercial Rufus Radcliffe, our CMO, our Chief Marketing Officer Julian Ashworth, Director of Strategy and Director of Consumer Mark Smith, just appointed as our Group Chief Technology Officer, Julian Bellamy, Managing Director of ITV Studios David McGraner, the Chief Finance and Operating Officer of ITV Studios Dave George, our CEO of ITV America and Maria Kiriaku, President of International ITV Studios. So let's get what you all want to know out of the way first. We won't be saying anything today on current trading. We will be updating you as part of our normal trading statement in November, nor will we be commenting or answering any questions on current speculation on Endymol. So before I hand over to the team, I just want to say a very few things. Just a reminder first of our strategy. As you know from our half year update, our vision for ITV is to be more than TV, to be a structurally sound integrated producer broadcaster where our ambition is to maintain total viewing and increase total advertising revenue, to be a growing profitable content business, which drives returns and to create value by developing a strong direct to consumer business, nurturing relationships where people spend money on a range of content and experiences with a really trusted brand. This strategy will continue to deliver a cash generative and profitably growing business, creating value for our shareholders. As you know, the strategy will focus on three key areas: strengthening the IPB, the integrated producer broadcaster growing UK and global production and creating a scaled direct to consumer business. It is completely deliberate that ITV is at the center of this chart. These are not independent silos. They work together, reinforcing each other, creating synergies and augmenting value. Today, we will spend time talking about our key priorities and investments, how we will deliver content to people however they want to watch it, making the hub central to ITV and increasing users and dwell time. We will cover our commercial strategy, which will be more client facing, and we are investing, as you know, in creative brand partnerships. We will go into more detail on how we will drive viewing, particularly amongst light viewers, and extend our reach for advertisers by doing that. You'll also hear more about how we will use the investment in data and tech across the business, leveraging this to drive new revenue streams from addressable advertising and from direct to consumer. I know some of you are very keen to understand our investment requirements in subscription video on demand. Now we can't be specific today as we are working through a number of plans, but a base plan, but it does depend on who we partner with and how we partner. So we will give you more details on that, and the latest we will do that is by February. What I can say is that investment here will not change our financial commitments already outlined in July, And we will be taking you through today the most up to date research that we have undertaken, which shows the market opportunity and how we are really well placed and well positioned to build an SVOD proposition. I'm also really pleased to tell you that we have now appointed a Group Director for SVOD, Rima Sakhan, who is sitting here today. She's just come over from New York. She has spent the last year very successfully driving subscriber acquisition and content at BritBox U. S. And Canada, of course. And prior to that, she was Director of Marketing and Media at ITV, where she actually worked on all the initial plans for BritBox worldwide. Rima's major focus will be The UK launch, but she will retain her responsibilities for BritBox U. S. Our approach to SVOD will be phased using all of our learnings and experience. We've developed that through BritBox, as you know, through Hub plus but also through Circus. And we will work with the right partners, allowing us to balance risk and reward over time. Finally, we're going to be spending a big chunk of time today going into some depth on our Studios business, an area we know from feedback that you are all very interested in hearing more about. So to deliver our strategy, we've already outlined and announced that we will be investing £60,000,000 across the business over three years. We think this level of investment to deliver what we have set out, today we will demonstrate how we are putting this investment to work, pounds 40,000,000 in the IPB business across the hub, marketing, data, technology and addressable advertising capabilities £10,000,000 in studios to strengthen creative talent and monetization capabilities. We are also we have already invested actually in a joint drama fund and an entertainment fund, pounds 10,000,000 in direct to consumer opportunities that includes any that excludes any investment in SVOD. A significant part of the investment will be offset by cost savings, as you know. The net impact of the plan is 20,000,000 to £25,000,000 That excludes any incremental revenue benefit that we will gain. The revenue benefits we will deliver over the course of the plan are reflected in our targets. We have set that in online. We've set those in the hub, in studios and D2C. They will more than cover the net impact, but will be back end loaded. All of this is driven by our KPIs, which we presented to you already in July, and we will be discussing those KPIs in each of the presentations you will see today. In addition, we have a target which reflects our aim to continue to diversify the business by growing our non advertising revenues by at least 5% CAGR to ensure ITV remains robust and resilient. It is essential that we maintain our financial discipline. And so as well as our cost savings, we will maintain our profit to cash conversion at around 85%. So you all know we have a strong balance sheet. We will be very disciplined about our use of capital. You will hear the word discipline quite a lot today. We're investing to drive organic growth in the business. We will look at selective value, creating M and A only in line with our strategic priorities, disciplined targeted M and A, which has a compelling commercial rationale and is focused on value creation and delivering returns above our cost of capital. We have a clear framework of financial acquisition criteria by which we evaluate potential acquisitions, and we will ensure we are consistent with our dividend and capital allocation policies. The Board, as you know, intends to pay at least an AP dividend per year for the period of investment in 2018 and 'nineteen, and that reflects the Board's confidence in the business and in the strategy as well as the continued strong cash generation. So over the medium term, the Board intends that the dividend will grow broadly in line with earnings. Our objective as we allocate capital to invest in the business and deliver returns to shareholders is to maintain investment grade credit. So on to the IPB. As I said, we're strengthening our core UK integrated producer broadcaster business to ensure that we can address the opportunities and challenges of structural change, actively managing shifts in viewer and advertiser behavior and providing a strong branded data rich relationship with our viewers and with our advertisers. The heart of the integrated producer broadcaster is fantastic content. So to start with, Kevin is going to give you an insight into the broadcast markets in The UK and how we will continue to succeed. We have had the most fantastic year for viewing. Kevin needs no introduction, having been Director of TV at ITV since 2016, Managing Director of ITV Studios for six years before that, Director of TV at Channel four and Director of Programmes at Channel five. Kevin? Yes, no, that's to stay at internal you can turn it off now, thank you. Jovi, it is, in fact, my birthday today. Yes. '51. Thank you very much. Yes. Yes. I say that at every presentation. So but it is true. So what I thought we'd I would tell you briefly is the questions people ask me who who know nothing about television, that would be you lot, is how do you decide what goes on air? You know, what are you trying to achieve? What what you know, how on earth do you make these decisions? Where do you get your programs from? So that that's I will give you the kind of bluffer's guide to that. But as it's a company that makes television programs, I thought we would start by reminding you, because you don't look like enormous heavy TV viewers to me, just what we put out so far this year. So let's have a look at this tape. Remember, accept nothing, believe nobody, challenge everything. It's real. We are going even deeper than I could ever imagine. Here's what's coming up on today's show. Here we go. You have to answer for what you've done. I haven't done anything. Twenty seven years. That's a long time to carry a secret. He knows what he did. I want my wife's real killer found, and now I want justice. Today doesn't seem that bad anymore, really. Shall we get this show on the road? 15 questions for lifelines. Who wants to be a millionaire? Dancing on ice is one of the hardest challenges there is out there. You have this to content with. On the gun issue, why has nothing been done? Think she thought Welcome to Jurassic Park. Are we ready to go? Yeah. That's something I'm pretty proud to be a part of. Just enjoy it, mate. Do you remember that day? We're in trouble here. It's freedom to be who you are. Boy or girl, but still love him. That doesn't change. I love sanctity. Time for something very, very special. It is promising to be a spectacular day. What a treat. This was absolutely breathtakingly good. Thank you. The winner is We got fireworks in everything tonight. I knew it gonna be intense, but not quite like this. Bloody good telly, though. So yeah. That's almost applause there. The so you can see, I think, what you take away from that is how much television we have to make all the time, the range you've got from drama to sport, from factual to entertainment across our six channels. And obviously, our biggest channel, the main channel ITV, is the first priority. And here, I suppose the target really is the thing we call MSG, which sounds like a sort of disgusting disease, but in fact, is mass simultaneous reach and is about us hitting as many people as we can at any moment, all day, all night. And this is something that we are incredibly good at now that we've been working for, for years, and it's to find vast millions of people to come and watch our programming, and therefore, advertising every day. And this this is achieved by we start in this very studio in that, you know, oh my god, Piers Morgan's arse has been on that chair. We start with Good Morning Britain, which has increased its reach and audience this year as it did just ever since it's so annoying that it's Piers Morgan is the reason that it seems to be working, as I have to put up with him every day. And but that that increase in viewers, which is really difficult to achieve now, because certainly through the day, people's habits of viewing are most entrenched. If you think what you do yourselves, in the morning, you turn on radio for us, spectral you. You watch telly. It's very hard to get people to change, but they are coming undoubtedly in their substantial numbers to our shows from Good Morning Britain, which means that they stick around in there for Lorraine and This Morning and everything. So all through the day, we are hitting primarily Housewives of Children. We are getting at people before they go out shopping. So if you want the last get at them as an advertiser, it's it's now. And this has been incredibly successful, and it's part of the bedrock of why we have such large audiences all the time. It it it flows through after the news hour into probably the most important part of what we do, which is our our soap operas, Emmadale and Corrie. And these are they're a particularly peculiarly British phenomenon that there's six episodes of each of them a week or in the weekday before 09:00. I don't does anybody here watch Emmerdale? Yeah. You see? No. Not not the front row. And the real it's what's curious about that is that it's easy to forget the how enormous these soaps are. In in Yorkshire and Lancashire and Cumbria and up north generally, when Emmerdale's on at 07:00 every day, it has a 78% share of viewing. So it's just if you go up north, it is a phenomenon. And both these sites I mean, they reach the whole country, obviously. But to put it in perspective, you'll all think, oh, the bake off was a big thing, and it went to Channel four, and that was a big thing. The soaps for us are the equivalent of having bake off every single day all year round. We get seven, eight million people regularly for an hour and a half every day. That's an extraordinary thought that if somebody came in to see you today and said, look, I've got this great idea. I'm going do this sort of soap opera thing and 8,000,000 people are to come every single night, you'd think they were mad. But we we deliver that in, and that is the the bedrock of of everything that we do. And it funnels viewers into the 09:00 peak hour, which for us is is the big battleground that we often fight with primarily BBC one for mass viewers. And here is where we we get into our dramas, many of which you you will have seen, I suspect. And we've been incredibly effective so far this year. As I said as I said, therefore, the top five dramas this year been on ITV. The BBC BBC one is really annoying. They had the most catastrophic year of drama. And then the bodyguard comes along, and everyone goes, oh, it's great, isn't it? The BBC drama. You think, no. It's only the bodyguard, which happens to be made by ITV studios. Darn it. So that's all what what we're trying for is these these mass audiences. And then, of course, at the weekends, terribly important part for us, and the thing that we're perhaps most famous for is our great big entertainment. So, again, there are there are basically it's people will look back at this as a sort of golden age of entertainment across British television. And there are seven shows, enormous big shows that the whole family watch together, and there are millions and millions every Saturday night, and all but one of them is on ITV. There's only Strictly Come Dancing that's on the BBC. And so if you're sitting at the BBC, trust me, they look at us with just green with envy as as to X Factor and Britain's Got Talent, and I'm a Celebrity and The Voice and Dancing on Ice. These are enormous big family shows that really define our brand. And and if you want to get in a lot of people, it's these shows you need to be in. So alongside that, we run concurrently with our other channels, and sometimes sometimes in specific areas on the main channel, we target specific audiences. So on our digital channels, IDV two, three, four, B and children's, we were more targeted. And so if it's IDV four, it's sports like the Tour de France or the TT or the Paris Open. And these are this is aimed at men, and Kelly just sells to men in these things. And it's incredibly effective and profitable for us. And the the biggest one, I suppose, is ITV two. ITV two, we decided a few years ago to absolutely concentrate on younger audiences. And there is a there is a lot of hot air talked about young audiences. They they that they're not watching television. That they're running away. They're not doing this. And then, I mean, god bless it, along comes Love Island. And every practically, everybody sort of from the age of about 13 to 25 is 09:00 every night all through the summer turning on ITV two hooked, addicted, and dragging their parents with them, who then pretend that they're not that interested. But in fact, I'm talking about you. So the the great thing about Love Island is and and everybody, I suspect, in their own presentations will will mention it because it is it is a phenomenon to find a show that that just comes out of the blocks and does so well amongst the the very group of people that, you know, you think aren't watching television. And this, for us, is an example of why being an integrated producer broadcaster is such an advantage. So it's a show made by our own studios. And what it means is that we can have total control of this program. We can decide where exactly where to put it, who can be on it, how long we want it to run. We won't ever get shafted on what the cost of it is. Think how the BBC must feel about losing Bake Off. Their biggest it was the biggest show on British television. And because they didn't own it, they didn't control it went somewhere else. That can't happen to us when we're controlling our own when we make our own shows. And then, of course, the exploitation financially of that show through Kelly's division and D2C is within our own capabilities and has been incredibly effective. So I would say that the other thing people often say is, have we got enough money? You hear these figures of Netflix is spending $8,000,000,000 a year, and how can you possibly compete? We've got we spend £1,100,000,000 approximately each year on our content. And and I think, actually, this year is a demonstration that it is enough. It's about it's about the prudent use of that money and us getting better at picking hits and things people want to watch. So this year, we've increased our viewing by over 10%, 12% or something. And when everybody else is losing viewers, when everyone said, oh, they're going be leaving terrestrial television, well, they're not. They might be leaving the other channels, but they're coming to us. And this is because the combination of the shows that we're picking, of the way that we're promoting it, the way we spread it around on the digital channels, and a few hits, like Love Island, and it can make a substantial difference. So I I think that the the the Fangs, the Netflix, and Amazons are not quite yet on our on our turf, really. They fight for some of the talent, but to my knowledge, the only show that anybody would have taken that the that Netflix got was was The Crown, which is a wonderful show. But I don't see anything else that they've taken from us, if you sort of mean. So that and I think to keep them into perspective, look, it's a brilliant business. It's a brilliant way to watch television and all that, so it's great. And and it's a place where studios can sell to. But but if they were a channel, they'd be 4% of people's viewing. They'd be somewhere between channel five and channel four in their size. And that's, you know, good luck to them, but that's not quite on our lawn. And so I think our our continued approach is to find shows that reach mass audiences. It's really difficult, but it's the thing ITV have been sort of built to do and have been doing effectively for so long now. And I don't see that diminishing in any way. So I think it's all going to be rosy. I use the phrase, I see only growth. Don't know if I mean it, but we'll try. And I don't think that anybody a few years ago would say ITV would be in this strong position on air and in its program offering. But it is, and I see it growing next year. So that's me done, I think. I've never heard you say that before. Thank you. There we are. You. He usually is one of the most as a fellow of Virgoen, he's actually so pessimistic. He's like, I'm not sure. Okay. Anyway, next up, we're hearing from two incredibly positive people, Steve Ward and Faz Aftab. Steve is our Director of Digital Products and Marketing, having joined ITV in 2015 to launch and run the ITV Hub. He joined ITV from Channel four, where he ran their viewer relationship data strategy. And Faz is Director of Platform Distribution, having joined ITV in 2011 to spearhead the distribution of the ITV Hub. And before joining ITV, Faz was Commercial Director at Move Networks. She does talk a different language on occasion. You might have to bear with her, but distributing she was distributing at Move Networks a generation IPTV platform. So first, over to Steve. Hi, everybody. Great to hear from Kevin and Carolyn about ITV's broadcast channels being in fine form. But we also know that The UK VOD market is in great health as well. We've seen strong growth over the last few years, and we're expecting that to continue over the next few years as well, which is why we're investing in the ITV Hub. As Caroline said, we want to be a structurally sound, integrated producer broadcaster, and the Hub has a big role to play in that. The Hub is the IP version of ITV. It's built to capture the growth in online viewing. It provides the targeted ad platform for Kelly and team to be able to exploit, and you'll be able to talk about that later. It's also the entry point for the ITV brand for light and younger viewers, something that Rufus will touch on later. And also from the data that we know and the insight that we know from our registered user base, it's something we can use to be able to really cross and upsell our SVOD and D2C ambitions, something that Julian will talk about later in the sessions. It's nearly three years since the ITV Hub launched. And in that time, we've spent time growing engagement and really investing in our underlying technology platform to ensure we're ready for the future. We're on 28 platforms, and we've grown registered users to over 26,000,000. And in that time, we've more than doubled requests. Since 2015, we've more than doubled requests, and our overall viewing time spent with the ITV Hub has grown threefold. And to give you a bit of a sense of scale of the amount of viewing that's now coming through the ITV Hub, 40% of all Love Island viewing came via the ITV Hub. And it's not just about catch up. During the summer, 950,000 people tuned in to watch England versus Columbia live on the ITV Hub. And as I mentioned, we've invested a lot of time and effort in our underlying technology platform. The ITV Hub is one of the biggest UK's biggest video platforms, and our engineering approach reflects this. It's built in the cloud, so we've got scalable and resilient technology, which can deliver large audiences. We have the agility of microservices, which means that we can create and change things centrally and deploy them to all of our platforms relatively quickly. And we can also we've also built our database and video measurement platform, which means we can see everything that viewers have watched on the ITV Hub on owned and operated platforms, which is crucial for our personalization ambitions. We can take direct payments, and we also offer single sign on across all owned and operated platforms. And also, we can offer a targeted advertising solution and hub simulcast ad replacement, which is something that Kelly will talk a little bit about later. So we've invested time and energy into our engagement and grown our engagement, and we've also invested in our underlying technology. But what's next? Where do we want to go next? Well, we want to invest in the ITV Hub to grow viewer engagement even further. We're investing in engineering expertise, and we're also investing in our user experience and product specialists to really drive that user experience. We're also going to be pushing off rights and infrastructure costs associated with growing in that viewer engagement area. The reason why we want to grow viewer engagement is because that's what drives our targets and our KPIs. We want to have more registered users, more long form video requests, more online consumption and more monthly active users, which all drive our key targets. And how are we going to do that? Well, we're going to concentrate on three areas: content, we want additional content to really enhance our catch up experience, we want to showcase our programs in the best possible way and bridge the gap between ourselves and others in the market and also distribution, which Faz will talk about. But we want to ensure that our programs remain at the fingertips of all viewers. From a content perspective, we've done loads of trials and tests of different types of content, short form, exclusives, all kinds of different things, And we'll continue to do that trialing and testing and really try and understand what drives viewer engagement. But what really resonates with viewers and really drives engagement is relevant archive and series stacking. Relevant archive is when we make box sets available on the hub just before it broadcasts on air, so we can get viewers into the narrative of shows. It tends to be the previous series of a program that's made available for people to watch before the new program comes on air. And series stacking is when we make the program available throughout the linear run and then as a box set at the end of it. A really great example of that is earlier this year, we, had Marcello Series two returning to the channel, and we made box set of the first series available before the program came on air to get people into the narrative so that they could either watch it on catch up or watch it on air. And then we also made the program available throughout so that people could catch up whenever they wanted. Viewers could catch up whenever they wanted throughout to be able to get into the narrative. And at the end of the show, series one and series two were available for thirty days afterwards for people to be able to get into and watch the program. Now this allows us relevant archive and series stacking allows us to take advantage of other viewing windows. Catch up remains at the heart of what we do. Catch up really shows a strength of schedule that people are seeking out the programs that we're putting out on air. But that strength of schedule really drives excitement and awareness around shows. And so what we want to do with series stacking and relevant archive is really extend that excitement into the two viewing windows adjacent to catch up, so pre broadcast window and then the post broadcast window. And obviously, there's a fourth window in there, which is the SVOD window, which is what is something that Julian and Rufus will talk about later. From a viewer experience perspective, we want to build the best viewer experience we can to be able to really bridge the gap between ourselves and others in the market. We're going to use four it's going be based around four themes: consistency we want consistent user experience across all devices We've also got 26,000,000 registered users, as I said, and we want to create 26,000,000 individual personalized experiences on the Hub. We want to develop the right features that really drive engagement but also deliver against our KPIs, And we want to punctuate the experience with video promos. Now I can imagine that feels a little abstract. So what we've done is created a conceptual demo of the user experience. You're one of the first people to see this. And so we're really excited about it. But as with all conceptual demos, it's just concepts at the moment. It shows direction of travel of where we want to take the hub and where we want to take the experience. And this is not the end game. This is not exactly how it will look. There's lots of work to do to be able to validate this with with viewers over the next few months. So imagine a viewer called Heather has landed on the ITV hub. There is a, The New Drama is presented to her as a featured item. She can then the video promo plays, and then she can scroll down into her latest top telly. She can scroll left and right to see all the different television that's available to her. And then she can go into her personalization features like resume play. She notices that she can resume pause on one device and resume playing on another. And then she's into her recommendations. So you can see again, she can scroll left and right. And these recommendations based on programs that she's watched before and a promo of The Family Guy plays as well, really drawing her into the action. And then there's four box sets available that are relevant to her. Again, these are data driven. She clicks on Vera. She can see all the episodes and series that are available. A trailer is available, so she can see what she can propose to watch. But Heather's just realized that she's missing the football. And so she clicks on the channel pages, and that takes through to the channels, and the England game is available for her. She joins at a very opportune moment. And she realizes that she wants to start again, and she wants to watch it from the beginning. So that's all right because Heather understands that we have a feature called Start Again, and she can go back to the very beginning to be able to watch So that's a really quick whistle stop tour of where we think we're taking the ITV Hub user experience. You can see in there, there are all of the four themes that we talked about: personalization, features that really grab attention, punctuated with video promos. And also from a very geeky user experience perspective, that user experience allows us to take it across lots of different platforms, particularly Connected TV, which is where we have a bit of a difference at the moment. So I'm going to hand over to Faz now, who's going to talk about distribution and how we're going to keep the ITV hub at the fingertips of all ITV viewers. Thank you very much. I don't get to walk on to music. I'm quite disappointed about that. Might get you all to sing. So I'm Faz. I'm going to talk about distribution, and I'm going to start by setting the scene. The ITV Hub is on 28 platforms and another 14 if you count our free view play, our joint venture with the BBC Channel four and Arkeva. These platforms enable our viewers to watch what they want, when they want, on the screen that's most convenient to them. We've achieved this reach by developing great long term relationships with our partners from LG to Samsung to Sony, from Xbox to Google and Apple. Thanks to effective distribution, the success of our partners and content and a brilliant team of engineers, we're pretty ubiquitous. It's hard to buy a smart TV without the Hub app on it. I'm going to focus in on three areas. I'm going to talk about our distribution ambition. I'm going to give you an insight into our principles. And then I'm going to finish with an insight into what's coming up next. So let me talk about our ambition. We want to make sure that ITV is prominently available to all UK connected users through their favorite devices and platforms, offering our viewers a seamless, consistent and personalized ITV experience on the different devices they use to access our content. Our ambition is supported by a set of principles that allow us to maximize direct reach and help us grow viewer engagement. The first of these principles is that the ITV Hub should be easy to find and access on all platform UIs, and ITV programming needs to be prominent on these UIs. The next is attribution and branding. When somebody watches strangers, it should be clear that that is a program from ITV. The next is data. ITV will own consumer and usage data from our app on these platforms. This data will be used to deliver a consistent user experience and features like Heather's cross platform resume. The next is ubiquitous reach of our app. So we can see today no one platform dominates viewing and we must maximize our direct reach. We're already progressed on this journey and I'm going to give you two real examples of our principles at work. Let's look at prominence first. The ICV hub is available on 93% of smart TVs in The UK. And we've successfully secured prominent positions on the leading smart TV manufacturers, Samsung and LG. These are long term relationships. Our relationship with Samsung started back in 2011, when consumers first started to connect their TVs. The second example demonstrates our attribution and branding ambitions. Our viewer research shows that there's a limited awareness of our offering and a lack of brand association with our programming. Rufus will cover this in more detail later. But through our principles and marketing, we can ensure awareness, attribution and prominence of our brand. The TV app from Apple is a brilliant example of a partnership following our distribution and branding principles. And if you go to the TV app homepage now, you will see ITV you will see ITV on their homepage. And finally, let's have a look at what's coming up next. We are seeing an increasing trend towards platform level discovery and aggregation. They are the IP versions of the EPG, and we are working with our partners to ensure that we are prominent and discoverable in these areas. To do this, we are distributing enhanced metadata, and this is where I stop talking English and I'll try and explain it what I'm trying to say. But this is to power search, discovery and recommendations so viewers can find ITV on these platforms. In addition, we're working closely with Amazon and Google with voice to voice enable access to our content, because we want prominence across all interaction paradigms to grow viewer engagement, whether you're typing, tapping or talking. The next two look at reach. We're working closely with Virgin to seamlessly integrate the ITV Hub within the platform, allowing viewers the option to watch ITV Hub direct on that platform. This drives more engagement and it also keeps viewing on the set top box. The next two devices are quite different, both powered by Android TV. The first is a Google soundbar and the second is Android TV. We're working closely with Google and Freeview Play to give our viewers the option to watch ITV Hub direct on these platforms. So in summary, we want strategic long term partnerships and more innovation in those partnerships to maximize our direct reach, allowing us to grow viewer engagement. Thank you. I'm going to hand over to Steve to sum up. So this is not all going to land in one go. That's not how digital product development works. We will use data and analytics and data and analytics and user centered design coupled with user testing and agile development to be able to really make ensure that the experience that we create really drives that engagement that we want and delivers against our KPIs. So in summary, the ITV Hub has grown engagement, and we want to continue to grow that engagement. We've invested in our underlying technology to make us ready for the next stage. And the next stage, we'll be focusing on content, experience and distribution to make sure we deliver against those KPIs and that engagement that we need. Thank you. Brilliant. Thank you, Steve. Thank you, Faz. I'm now going to introduce you to Kelly Williams. Kelly has been at ITV for seven years. He's been Managing Director of Commercial since 2014. He sits on the Thinkbox Board, the Barbs Strategy Board and is Vice Chairman of the Advertising Association. Before joining ITV, Kelly was Sales Director at Channel five. Kelly, where are you? Afternoon. Sorry if you're expecting a woman. I get that a lot. And I'm glad most of you got the white shirt, blue jacket memo. So look, the first thing I'd like to say is that it's I think it's never been a better time to be a viewer. I'm sure lots of you watch television, but whatever channel you're watching, I think the quality of television production today has never been higher. And as a result, I think it's never been a better time to be an advertiser. So look, I'm not going to talk about the power of television, about televisions and ITV's unique ability to be able to deliver mass simultaneous reach and frequency for advertisers in a regulated, brand safe, quality environment, okay? Nor am I going to talk about TV's ability to create a real emotional connection between our viewers and our content. Because it's this emotional connection that means that television advertising has the power to make millions of people across the country think and feel differently about brands. And I'm not going to talk about the wealth of independent research about television advertising that prove that it's the most trusted, but most importantly, most effective for driving sales, for driving profit, driving market share and building brands. ITV is more than TV. And in the commercial team, we like to say ITV is more than TV advertising. So what I am going to cover, want to cover two areas. Firstly, I just want to talk about how we are evolving our sell, why we are scaling up our direct advertiser capabilities, working with new kinds of advertisers and working on new kind of deals. That's the first area. And then secondly, I want to kind of acknowledge and address changes in viewing behavior and talk to you about why we see this as an opportunity rather than a threat. So let's start with the first area. One of the key pillars of our commercial strategy is to become much more direct to advertiser focused. Media agencies will continue to be a very important part of how we trade, but we're determined to transition our client relationships from being a transactional media partnership into a strategic business partnership. Now it's fair to say that since the Brexit referendum in July 2016, the market has been tough, particularly for many of our key advertisers, whether that's through kind of uncertainty, whether that's consumer confidence, whether that's as a result of currency shifts or as a result of new and disruptive competitors. But despite this, and arguably because of this, we're seeing a shift in the makeup of our client base. While many of our established advertisers are struggling, we're seeing a new generation of digital native challenger disruptive brands move into TV as they begin to understand the power of TV. It's across every category, finance, retail, travel, consumer goods. We're dealing with the likes of Purple Bricks, Misguided, Trainline, Harry's Razors, Checkatrade, Airbnb. The list goes on. There's many more there. Why? Because these digital businesses, because they are digital business, they can see the immediate effect of their spot advertising. They can see the immediate short term uplift, and they also understand that in the long term, they've got to build their brands. And TV is the only medium that can do both. And it's not just spot advertising. All of our key sponsorship deals have moved from being sponsored by established advertisers to these kind of digital disruptors, whether it's Gift Gaff on The Voice, you switch on Britain's Got Talent, We Buy Any Car on Dancing on Ice or Just Eat on The X Factor. In the final of X Factor last year, Just Eat sold 500,000 takeaway meals. That is a business impact. And despite the challenging market, we're building new kinds of deals with advertisers across the board. I just want to just share with you a few examples. The first one is Matalan. Now Matalan with Matalan, we had created a fashion advice show that lives online and on the Matalan app, but it's promoted through regular thirty second advertising campaigns exclusively on ITV. It's presented by Denise Van Oouten. We produced the show ourselves. We use ITV talent in the show as guests. It's now just starting its third year. They spend their entire TV advertising budget on it. And for those of you who follow these things, Matalan has been one of the shining stars of the high street. Second example, I'll to you about Camelot. Some of you may know that the National Lottery Show that used to be on the BBC came off the BBC last year. They came to us, asked us whether we would show it. Kevin didn't fancy it. It didn't fit really with our Saturday schedule. So we created an advertising campaign now running every Saturday night, fronted by ITV's Stephen Mulhern. They run two minute ads made by us, often live, as a mini lottery show. The initial run is for twelve months. It finishes next spring and is delivering on a very specific business need. Third example is, I guess, is Coronation Street. Compare the market. The Meerkats have sponsored this show for the last seven years. They've got two years left, which in itself, I think, demonstrates the success this has had for the brand. But Corrie is a great example of one of the first one of our first multi partner collaborations. We normally just have one sponsor on a show. But with Coronation Street, we've worked with Visa, we've worked with Interflora. This year, we added two retail outlets to the Street. We extended the Street and Costa Coffee and Co op formed the biggest product placement partnership on TV. And incidentally, it might surprise you to know that all of the poster sites in the show are sold by ITV. I think these poster sites are the only national poster sites in The UK. And then the final example I want to share with you in this area is Love Island. Now commercially, I don't think in sheer numbers there has been a more successful TV show. We've worked with 11 commercial partners, 11, right, which is unprecedented. We've had a headline sponsor. We've had product placements, brand licenses, podcast sponsors, in store branding, exclusive product lines and merchandise, bespoke creative executions, made in house. To to opportunity and their massive shot windows. Rimmel the took a fancy to the windows too with a specially made Love Island product line and a tattoo party in the villa. Jet two also jumped into bed with Superdrug, providing flights for competition winners. Forget emotional baggage, Jet two created a line of branded baggage and bespoke social posts featuring the islanders as they left the villa wearing clothing from another partner. Jeez. They're all cracking on. Missguided clothes adorn the hottest contestants, and their website, along with our official app, helped viewers get the Love Island look. Missguided then coupled up with Echo Falls, Love Island's official alcohol partner for a shared party for bloggers and influencers. Echo Falls animated a special new ad featuring on bottle branding. Ministry of Sound became a serial data providing the music for a villa pool party and the new Love Island Lakes at Fort Park. Another one, unbelievable. Lucid Day's ads were made by the Love Island producers And And about excited we're forgotten about your the on pack competition. And that time you got into bed with the morning after podcast. Sponsored by Kellogg's Corn Flakes. Oh, you dirty stop out. And Primark, here's to you and your brilliant Love Island beachwear. We found some perfect partners, can tell you're all fans of Love Island. Look, these deals go way beyond TV. They are more than TV. They go in store. They go unpack. They go online. They take licenses. They dial up product placements, and they engage ITV's on screen talent. And as an integrated producer broadcaster, we are uniquely positioned to deliver these ideas that are creating real business impact. So the second area I want to touch on is changing viewing behavior and how we see this as a significant opportunity. We like to say TV isn't going anywhere, it's going everywhere. Viewers can now watch TV wherever and whenever they want. And this year, I think, has been a defining year for the ITV Hub. You've already heard from Steve and Faz about how the platform has developed. From an advertiser's perspective, we have seen very strong growth in revenues for the Hub. And why? Well, I think there are three reasons. Firstly, the broadcaster VOD market is maturing. Advertisers are now understanding that it delivers incremental reach, illustrated by these charts here, which kind of looked at the kind of reach you could deliver with £1,000,000 ten years ago. An advertiser could reach just over 70% of a particular audience. Now £1,000,000 today delivers a little bit less reach. But if you rather than spend 100% on linear, you split that eighty-twenty between linear and nonlinear, you can hit the reach that you could ten years ago. Second reason I think it's we've seen strong growth is that the ITV Hub is delivering genuine scale of audiences now. We have more targeted inventory and reach on the hub than Sky Adsmart is delivering today. And thirdly, most importantly, I think, over the last twelve months, we have launched a range of targeted addressable products using our first party registered data. Year to date, over 50% of advertising on the hub is now using this targeted these targeted products. And we have built these products in four stages. I'll just take you through those stages. So Stage one, from our registration data, we know our users age, gender and postcode. So we can create campaigns that use barb targeted audiences, and we can do that regionally. So for example, earlier on this year, Specsavers were launching their new hearing sensors. They just wanted to target over 50s, and they just wanted to target people in Cardiff, Birmingham, Glasgow and Edinburgh. So we were able to deliver a campaign just targeting that audience on the hub. Stage two, we can match this with third party data sets offering interest based targeting. Equally, we can create our own interest based targeting using our own viewing data. So for example, we could create audiences of people who really like cycling based on their viewing data and create those audiences and sell them to the likes of Wiggle, Evans Cycles and Sigma Sports. And we can do that in real time. And then Stage three, we can also enhance these data sets with an advertiser's data set to create a more tailor made addressable campaign. An example of this is East Coast train. Now they wanted to target non customers. So they shared their customer data with us. We then matched it and excluded those people from targeting. We then overlaid their target audience of 30 50 year olds earning over £50,000 a year and living along this railway line. So we're able to create a bespoke campaign for them. And then finally, we can do all of this by device. So we can target by big screen, by mobile device or by desktop. So for example, Uber wanted to just target mobile devices, iOS and Android devices in major U. K. Cities, so we've been able to deliver a campaign for them. So we've built a suite of addressable products. That's all of them there. The top ones basically are there to complement our linear schedules. And the bottom one, for example, is there to offer a more digital like proposition, and the middle one is more around interest base. So for example an example of the top one, IT the surge product, for example, we work with John Lewis. What we mean by surge is an advertiser can buy every single pre roll for a short period of time. So they dominate the ITV hub. So for Christmas launch last year, John Lewis bought every pre roll between 07:00 in the morning and 01:00 on the day they launched, delivering about 2,300,000,000 ad impressions. An example of a more digital like product is the work we did with Intuit QuickBooks, software accounting firm who only wanted to target they used the Click product, so they just targeted clickable inventory because they were trying to get people to click from the ad to go and purchase. So we created a campaign that saw sales increase by 28%. And we are able to offer all of this to advertisers with the following guarantees: that their inventory will be brand safe, it will have broadcast level compliance, premium curated programming. It will be 100% human audiences, no bots, no ad fraud. It will be non skippable, full screen, and we even offer third party verification on completion rates. Now combined with our linear sell, we think this puts us in a very unique position to be able to offer the best of both worlds: mass marketing, mass simultaneous reach with creative solutions integrated creative solutions built from a linear schedule, combined with more tailor made, more addressable targeting at scale on the ITV Hub. So what next? In summary, we prioritized the ITV Hub to deliver our advanced advertising capability. Our ambition is to accelerate these capabilities, developing a more automated, sophisticated ad tech and data analytics solution. We're going to be more advertiser focused, building business partnerships with integrated commercial and creative collaborations, which is why as a team and a business, we are now focused on total advertising revenue. Our commercial vision, I guess, is for ITV to be the place where ambitious brands create their greatest business impact, and we think this is more than TV. Thank you very much. Thank you, Kelly. Brilliant. Next up is Rufus Radcliffe, ITV's CMO, our Chief Marketing Officer. Rufus joined ITV in August 2011 as Group Marketing and Research Director. Prior to this, he spent ten years at Channel four. He sits on the Freeview Board for ITV as well. So now over to you. Thank you very much. Good afternoon, everyone. Before talking about our marketing focus moving forward, I wanted to just set the scene with a broad observation about our viewers, and that is that they have never been happier. And our research shows that 23% of viewers are happy to describe themselves as TV addicts. 32% of viewers say that TV is their favorite pastime. And 64% agree with the statement that TV has a vital role to play in bringing different parts of society together. And I suppose it's not really surprising because viewers have got more choice than ever before, and viewers are in complete control, and they like it. We're we're actually in the third period of modern television now. The first era was obviously multichannel. The second was when the PVR came along. And now, as we've heard about earlier as well, we've got millions of TVs that are connected to the Internet. This opens up a whole new world for our viewers. There is disruption happening, but as you've heard earlier with our plans for the hub, ITV will also be a disruptor. And in this connected world, viewers now have time to spend more time with ITV than ever before. And despite the amount of change going on, TV viewing levels are actually relatively stable. People are still spending almost three and a half hours a day, watching TV. And this is viewing that's taking place on the TV set within seven days of broadcast and doesn't show the growth beyond seven days or the viewing that's happening on mobile or on tablets or on computers. And ITV is doing very well in this space with the ITV Hub being the fastest growing PSP VOD player. And viewing levels actually remain quite similar to ten and twenty years ago. A blip occurred between 2010 and 2013 when viewing went up in part because of the credit crunch recession. And we are guilty of thinking that everyone does what we do. This piece of research shows our bias in full effect and shows how often we don't understand what viewers are doing in the rest of the country outside of our London bubble. So from left to right, you can see here that people in the advertising industry believe that they watch 38% of TV live. Viewers believe that 55% of their TV consumption is live. The ad industry believes that viewers only watch 49% of TV live. And wait for it, the actual figure is 86%. But we do know the world is changing very fast, and there's this great quote by a futurologist called Roy Amara, and it's as true today as when he wrote it in the nineteen sixties, which is that we do tend to overestimate the effect of technology in the short run and underestimate it in the long run. This is known as Amara's Law. And we know that we need to reposition ITV in viewers' minds as a future facing digital proposition to continue to thrive. And this is evident when we look at the current distribution of our viewing. Our research team ran all bar panel member viewing to ITV for a twelve month period across 2017. They took out the right hand side here, which were very super light viewers, and the remaining viewing was split into 20% chunks. There is a huge segment in the middle here of light viewers, 32,000,000 of them, who are only currently responsible for 20% of our viewing. And from this group of 32,000,000 viewers, we've created a brands target, and we've done this by removing kids viewing, removing the lightest TV viewing from it who have a relatively high share to ITV. We've removed the heaviest TV viewers who have a relatively low share to ITV. And what you end up with is a brand target of 15,000,000 viewers. And we believe these viewers are targetable and winnable. And our brand target don't look like this. These are the hocks and hipsters. These are the super lights. These are not the people that we are targeting. In fact, our brand target looks like this. They watch almost three hours of linear TV a day. They watch quality output on any genre. They come to ITV twice a week. They watch less ITV and a little bit more of everything else. And for this group, there is an ITV brand perception challenge, and this is best illustrated by a piece of research we did last year. Before any marketing or PR had started, we tested our new drama Liar with this audience and asked whether they would watch it. 29% said they'd watch it if it was on ITV. 50% said they would watch it if it was on Netflix. And we believe this is driven by a lack of awareness of what our offer is. 44% of adults see at least 10 promos from ITV a week, but 27% don't see any. And this lack of awareness of what we're offering is evident from this short film that I'm now going to show you. I'm Eamonn King. I'm a structural engineer, 30 years old, soon to be 31. I'm Elizabeth. I live in London, in Patney. I am a doctor, currently doing research. My name is Carol. I have four children, all grown up, and one grandson. Hi. I'm Ben. Spare time. I like to make music. I watch quite a few documentaries, quite a few dramas. Mostly dramas, I would say. Mostly dramas. Loved Love Island. I did watch Love Island. X Factor. Unforgotten. Jonathan Ross talk shows. Obviously, during the World Cup, used to watch lots of the World Cup on there. This actually is proper good. This looks really good, man. It actually looks like a film, doesn't it? You know I mean? It's the kind it's it looks like a film documentary, like it's gonna be quite well produced. I I think this is more of a BBC one. So it is like they put a lot of money into it because it looks really polished. Did you watch it? Yeah. Of course. Yes. Yeah. B b is it BBC? Absolutely love it. This looks right up my street. That's definitely will be something I'd watch. Yeah. BBC one, BBC two? Yeah. Could be BBC three. This is right up my street. This looks like a a Netflix classic documentary. Are they? Oh, okay. Wow. Oh, really? I'm surprised they're all on ITV. On ITV? Come on, man. I know. ITV. The production was so similar to what Netflix would do, so it looks like a Netflix production. That's the that's the kind thing I would watch without someone telling me it's good. And I would just watch it, and I would expect it to be on Netflix just off the bat, and it would be like a Like a like an immediate hit. If you're permanently on Netflix, you're not gonna see the trailers on for ITV. You're not gonna be really so they need to find another avenue to get that message out to them, whether they Mailing boards. The video ones or just or just a post to post. I definitely take note of those on the side of a bus. And then, like, you see that ITV logo over. And you go, oh, let me see. Let me check it out. They had realized that there are other channels out there. There's a lot to compete with. There's a lot to watch. So, yeah, it's good for them. I think it's good bringing different audiences back in. So I I'm buying them all dinner later. But so our marketing focus now is about repositioning the ITV brand and about moving us from being a default broadcaster in people's minds to a linear and on demand destination. And you've already heard earlier about what more than TV means, and this will be the basis of our marketing proposition moving forward. And for viewers, our brand focus will be threefold. It will be dialing up the creativity of ITV, which we don't get the credit for at the moment. It will be talking about the emotional power and impact of our content and that we are not just a linear broadcaster, but we are a digital brand. And we're working with a new creative advertising agency called Uncommon alongside our internal agency, ITV Creative, to bring this to life over the next few months. And as part of the investment that we announced in July, we'll be spending an incremental £10,000,000 off ITV to win back light viewers. Historically, this is what an ITV marketing lay down would look like. So you can see from January through to December, along the bottom, you'd have our on air promotions, and then you might have four big campaign spikes for our major priorities across the year. But we will now be investing consistently off ITV to reach live viewers. So on top of our on air that you see there, there will be an always on drumbeat of off air activity, driving viewers to the next thing on ITV across press and social and outdoor and radio. There will be a layer of brand activity reminding live viewers of our creativity, of the impact of what we do and our digital credentials. And then there'll be seven spikes across the year, which will be supporting our major launches both on linear and on demand. And you can see the impact of this work. In the marketing team, we look at three plus reach. And what we mean by that is we believe a campaign has to be seen at least three times by a viewer to be effective. And with on air alone on the left hand side, you can see that a typical new series launch would only reach 30% of light viewers at this level. But with promos and this light viewer network we're going to create, this gets up to 53% at the three plus optimum level. We'll also be building our own CRM capabilities and the overall value of our owned media. We have 7,900,000 fully opted in viewers across e mail and mobile at the moment. And as we build our campaigns, being able to target directly will be a huge part of our armory. And this slide shows it in action for Love Island this summer. We were able to use email and mobile to build anticipation around key launch moments, including cast reveals, one week to go till launch, the launch night itself, and then the opportunity to catch up afterwards. At ITV, we say that we don't just have viewers, we have fans. We have 50,000,000 followers across Twitter, across Facebook and across Instagram. We dominate the TV conversations online. And with our marketing focus on light viewers, we believe we can turn even more people from viewers into fans and also consumers that Julian Ashworth will be talking about in a bit. And with this increased investment, the team are working full steam ahead on repositioning ITV. Our KPIs are the ones shared across all of the IPB. They are share of viewing, monthly reach, monthly active users and also spontaneous brand consideration. And at its heart, all of our marketing will be bringing to life our new proposition for ITV, which is more than TV. Thank you, Rufus. Will you stay up here, stay on a seat there. And can I ask Steve, Kevin, whoever has been presenting to come? Well, Kelly. Right. So this is your chance now to ask some questions of any of these fantastic presenters. Could I just ask you, Jill, there's one here. And is Emma doing the other mic? Emma, there's another one there. Thanks. Yes. So Matthew from Bloomberg. So just touching actually on that last point about social media. I mean, given that we're moving towards a much more converged world, when I look at, say, the ITV Instagram feed or the ITV2, they're kind of only a couple of 100,000 people love islands, I think a couple of million. I mean how do you actually kind of draw more people into those platforms? Because that seems a great way to connect your content to particularly, I guess, the younger audience, who's to kind of really drive that brand and change the positioning. Yes. Mean I don't think we're our focus isn't driving people to those platforms. Our focus is recognizing that those platforms are places where our fans congregate and then driving them back to ITV. So I think what we need to do in any marketing campaign we build is just make sure that we're creating enough digital assets that we can feed those fan bases. And then ultimately, the KPI for us is then driving them back to ITV to make sure that they're spending time on our own platforms. I think it's over there, and then we'll come to the queue. Thanks. It's Laurie here from Deutsche Bank. Just two questions for Kelly. A lot of the metrics you were presenting were about share of viewing. We know that the total number of impacts across TV is falling. When we look at that in terms of pricing on a CPM basis, it means that ITV now is somewhere around about 15% more expensive than it was eight years ago. At what point do we start to hit tipping point on that pricing? Can you continue to inflate the pricing? Well, I think the first thing to say is that both our share and our volume of impacts across every demographic are up this year. We haven't seen that for a little while, I know. But across every single one, they are 10% to 12% growth. So tipping points are hard to predict, but I think the cost of TV today is and I don't know whether it's 15% more than eight years ago. Haven't tracked it that closely. But certainly, from twenty years ago, TV is still very, very good value. But within the TV market, the one thing that I think we're starting to see is a and we'll see how it plays out. But I think what we're seeing is because of, for example, the Sky platform, the way the Sky platform is built, Sky as a channel and the channels that sit on that are starting to feel the effects of the fact that, that platform is built for VOD viewing. So we think that could well put us in a very, very strong position going forward in terms of our position within TV. Now I'm not a big fan of kind of knocking the competition. I think it's a good thing to do. I think we as TV should sell ourselves. But there is, I think, the beginning of a trend that could see ITV, in particular arguably Channel four as well, see a real benefit from the Sky platform spending so much of its time delivering for subscribers as opposed to the advertiser. That makes sense. Okay. Second question is actually related to that. Why didn't you join AdSmart? Why build an ad tech platform now, which, frankly, if we had sat here in a Sky presentation, they were presenting a lot of this stuff five years ago? Yes. Well, we haven't I wouldn't say we're not going to. We've been discussing potentially joining AdSmart for quite some time. There's been a number of factors that have got in the way. Initially, sales sovereignty, they wanted to sell it. That didn't feel the right thing for us to do. Then there was access to data. They didn't really want to share that. That's moved on. But more laterally, it's around the commercials. And what's happened across those five years is that I think that the AD Smart technology is seven years old. It's built for satellite delivery, whereas the ITV Hub is IP built. It's owned and operated by ourselves. It's our registered user data. And the scale I talked about defining here. The scale of the ITV Hub this year, we think, puts us in a much stronger place than arguably AdSmart is in. And I think revenue wise, we're probably taking nearly three times as much revenue on ITV Hub as Sky AdSmart are taking. Thank you. You very much. Question over here. Thanks, Emma. And then I think there's one in the back of there. Hi. It's Will Packer from Exane BNP Paribas. A couple of questions from me, please. Thanks for all the detail on the hub. Just to take a bit of a step back in terms of the wider VOD and digital video market, could you give us a flavor for the growth involved and how ITV's market share is changing over time? And then the likes of Facebook video and YouTube are growing rapidly. Could you help us understand how VOD is performing versus those mediums and how you expect it to develop going forward? And the second question is around potential cooperation with your PSB peers within VOD. There's lots of press reports suggesting that there was potential Is that now dead? Is that the kind of message to take from the focus on the hub? Okay. Kenny, do you want to take first the market for VOD and particularly I'm assuming you mean advertising VOD, AVOD? Well, it's growing quickly. I think at the half year, we talked we announced that we're 50 odd percent growth we're seeing this year, which I think makes us arguably the fastest growing video platform this year. YouTube and Facebook, big players, they although they are having issues themselves around kind of the around brand safety, around viewability, around ad fraud, around transparency, which they're having to deal with. And I think the advertising community are becoming much more au fait with the issues that they face. But the things for me around particularly Facebook is and when you talk to advertisers and agencies, it's a very different proposition to broadcaster VOD. It's very much about direct response performance marketing as opposed to brand marketing. We did some numbers the other day, and we think Facebook in terms of Facebook's revenue, only about 30% to 40% of it is being spent through the major agencies, through major advertisers. The vast majority of it is this huge long tail of very small SMEs. And I guess one of the things we're trying to develop, and we're testing it at the moment, we're doing a test in central, is we've created a self serve portal for ITV hubs to target these SMEs. So our view is we think that's a pond we want to go and fish in because it's clearly been very successful for Facebook. And because of the scale we now have around the ITV Hub, we think there's an opportunity there. So we're only a testing phase. We're just testing in the central region. We've had an ad campaign running, and we're just seeing if we can get these SMEs to start advertising. Because again, 50% of viewing to the ITV hub is on a big screen. So that's addressable TV in itself. So we think we can get these SMEs on ad, creating very hyper local campaigns. I'd just add to that about Google, for instance, because YouTube and so we have a very strategic relationship with Google. They provide a lot of technology for us, but they do quite a lot of data analytics for us as well. And then of course, we do compete with them on occasion. But actually, when we have our conversations with them, they really, really, really need ITV content. I mean if you ask them that directly, they would say that to you. So on the one hand, they want our content. The second thing is there was a Deloitte's report out just yesterday, which made it it makes it very clear that the way you view is very different. Most of that viewing on YouTube is on mobile, and most of our viewing is on larger screens. I mean, of course, we have mobile viewing, but the emotional engagement you feel through a larger screen, especially when you're watching certain kinds of programs, has much more emotional engagement. That means it's more effective for advertising. So I think their advertising model is much different to ours, and it is and I think they recognize that. I think they're trying to do something for a much smaller screen. Do you have a flavor for relative size and growth of ITV VOD versus Facebook video or YouTube within The UK? It's hard to get those numbers because they don't publish it. They don't disclose. But certainly, the feedback I get from agencies is growth certainly in Facebook has declined to kind of single digit growth through agencies, but it's very difficult to get the numbers on the kind of long tail. And Morty over here is our absolute expert on all things to do with viewing, including on other channels and platforms. So you might want to pick up with him afterwards. On the PSP peers, I think that's I mean, I've been here since January, and my approach has been actually there's quite a lot that we have in common, and we are there are many areas we can collaborate. And I think that is the attitude of the other PSBs, Channel four and the BBC. And I think there will be partnerships of many descriptions. They will be in many different areas, and we have open dialogue with them. And I think that's very much supported by the regulator Ofcom and also by government. So I think more on that. Thanks. Okay. Was there another question in the back over there? There's one over there. And then, Emma, if you could yes, thank you. Jill, one over there. Yes. Thank you. It's Adrian from Bank of America Merrill Lynch. Two questions, please. First of all, Kelly, I think you mentioned in your presentation that advertisers, the classic ones, have been on the back foot since 2016. So have we seen a comeback from these big FMCG guys? Or are they still feeling jittery about the macro Brexit and everything? That's the first question. And secondly, you mentioned about getting more direct to advertiser relationship. How much of your revenues are coming from these? And where do you see that going in the next three to five years? So just talking about the market in general, we're not seeing any changes. So nothing's accelerating or decelerating. The two big categories that have found it tough have been the FMCG category, particularly the global companies who've been hit by the shift in currency and high street retailers. They're the two things they're the two areas. But as I said, we're seeing significant growth in other categories to kind of make good. So not just online advertisers, but across the board, we've got in the entertainment and leisure category, whether it's telecoms, technology, utilities, soft drinks, the government, confectionery, all categories that we're seeing growth this year. But look, think it's fair to say that I think until there's any kind of resolution around breakfast sorry, breakfast, our bacon and eggs around Brexit, it feels to me that those two categories are going to be it's going be tough for them. And on the client question? Yes. Well, I kind of said that we'll still keep trading with our media. I mean our media agencies are going to continue to be very, very important to us. They do a very specialized job negotiating big TV deals. Look, most advertisers, in fact, most pretty much all advertisers don't have the capabilities in house to be able to do those kind of deals. Few of them used to be able to do back in the day, but very few of them do now. So we'll still negotiate with media agencies. And broadly, about 15% of our revenue is done directly with advertisers at the moment. But when we talk about having more direct relationships, it's not necessary to trade those deals. It's about to create propositions that will drive their business and try and have a much more consultative sell as opposed to a transactional sell with them. Because one of the things that we're seeing in the market that's kind of well, advertisers don't seem to be paying good money for is the planning process. They're cutting and cutting the amount of money they spend agencies, and therefore, the whole art of planning is kind of being of Undermined. Undermined, yes. So I guess what we want to do with our client sales team, we're going invest in that team and try and fill that gap and just become a much more consultative sell. Thanks, Kelly. There's two more questions. There's three actually. So if we take one, two, three. And after that, you all might want a coffee. There'll be plenty of other sessions for questions, so we'll break after that. Matthew Walker from Credit Suisse. Two questions, please. First one is, Kevin, I think you talked about £1,100,000,000 how you've managed to make that go a long way. You feel that's enough, but the question is really how long is that enough? Because obviously, some of the other companies are going be ramping over the next ten years massively. So how long can that really be enough? And obviously, you've got great expertise in sort of making that go a long way, but that's the first question. Second is, I don't know if you've got any thoughts on whoever wins Sky not who wins, but what the impact of that might be for you guys in terms of the competitive environment after that deal. Okay. You. Kevin, do you want to take Yes. First, anyway. Yes. Of course, I don't want any more money. He's always asking for more money. Think you've got to be realistic. I think that the schedule is rich enough its offering. And as I said at the beginning, the growth in our share of viewing and in actual numbers of people watching our programs has grown quite a lot this year. And I think staying within the confines of this budget. And so I think it's incumbent on us actually to just make better choices and make programs that people want to watch. It's not always the most expensive programs that are the most watched. And so part of my job is the balance of where you put a lot of money into something. You know, you can traditionally, obviously, dramas cost the most, but it doesn't always mean they get the highest rating. So you you need to balance your your type of programming, your factual against that, which is traditionally cheaper, and keep going. So I I think so when you when you come across shows like Love Island that are hits, these aren't these aren't cheap, but they're not expensive. And one of the glories of Love Island to everybody to the left of me is really that it's on every night for eight weeks. And that you can do so much more than that than the traditional, you know, six episodes every Monday night at 09:00 or something. So I I think it's about us being ever more resourceful about what we do with that money. And it is look. It's 1,100,000,000.0. It's it's a lot of money. So at the moment, I don't feel the pressure that we're underfunded. I haven't I genuinely don't think I've lost a single show because we haven't had the money to get it. The supply is more my concern, if you like. Where are all the great ideas? Where are all the new hits? And the endless search for that takes up more time than turning things down because I'm spoilt for choice. And I think that leads on actually quite well to the answer to the second question, which is I think we don't really know. I mean Sky is a strong business anyway. So whoever gets this, it's going to remain a strong business. And I think that the Sky model is very much pay TV. Advertising is a kind of sideline, whereas for us, you know what our model is. And you know it's advertising, you know it's content, you know we're trying to create direct to consumers, we're kind of we have a multi revenue, multi profit business. And I think if one of those partners gets it, it's going to go much, much further down the streaming subscription. If it's Disney, it's going to be much, much more about DTC, is what they have publicly stated. And I think no one knows if it's the other. I just don't think anyone really knows. Feels much more about a U. S.-driven strategy for Comcast. It feels like it's going to help them diversify out of The U. S. And grow rather than no one really gets a sense of what that's going to do in The UK, what impact they'll have on Sky other than keeping it going as a very successful business. So I think it is important, and we've done a lot of work on this in the strategy, where Netflix's model is different, Sky's model is different and our model is different. And recognizing the differences, including in terms of how you spend your money. And also, you have to iterate your strategy. It's got to evolve in terms of everything you look at. And we have to remain competitive. That's the most important thing. We've got to be able to compete, and I think we're showing today that we can compete. Another question there. Julian, I'll come to you, although I did say only three more questions, but I'll come on to you. It's Richard Ehry from UBS. Just going back to sort of the collaboration story. If, for example, there is great collaboration in The UK, we get a new platform that's formed, we then see a shift of viewers to a larger, more collaborative platform. What does that actually mean for the ITP hub longer term? So it's a very hypothetical question because we don't know what the next step is. But what I would say is that we don't we see what happens free to air as being complementary to having a subscription board service. So we don't necessarily see it as being cannibalistic because there are many, many, many people that will choose free to air every time and won't pay a subscription because they are very used to free to air in this country. And I think particularly with the BBC, I know you pay for the BBC, but consumers don't quite think of it like that. They still see it as somehow free to air, which is not right. But I think that they will coexist just as we will coexist with Netflix. Netflix is a subscription model. Now when we go into SVOD, we will price ourselves at a very specific level so that and you will hear about this actually So maybe pause and come back with a question if we don't ask because we've done a lot of research on what consumers feel about subscription services. So maybe wait and listen to that. Was there another question here? Yes. Great. Thank you. Thank you. It was just about the ITV brand repositioning. Kevin, you talked about six episodes a week of both Emmerdale and Coronation Street. ITV is well known for its shiny floor shows. I think you said six out of seven or five out of six of the top shows. How do you reposition ITV given that is so much of your schedule in terms of attacking those light user viewers? And I guess as a follow-up too, as we head into potential new regulation around high fat salt and sugar advertising, will that mean a change of ITV schedule in some way going forward? Okay. Do you want to do the first? Yes. I mean I think one the big things about repositioning the ICEE brand, I mean there is there's obviously drama is one of the defining genres that people that viewers absolutely love. We do some unbelievable dramas, and that piece of research that we did around Liar proves that we don't get the credit for that at the moment. So there is a big job to do there. And I think the other big focus moving forward is also about how we position ITV as not just a place where you get unbelievable mass simultaneous reach, but we're a fantastic on demand destination as well. So one of the big parts of this repositioning exercise is dialing up our on demand and our digital credentials as well as being a linear broadcaster. So I think I don't think that I think that complements the schedule that Kevin is coming up with, and I think it is all aligned. I mean the video I showed you just also showed that the ITV story is not getting out there to these live viewers in a consistent way, and that we think is the big opportunity. And that was and every piece I mean, I've sat through so many research groups, and it just comes through loud and clear that they just don't specifically, this demo do not know the great stuff that Kevin's commissioning. So I'd say, you know, the soaps are one thing, and you're right about that it's quite a it's it's rare to get new people coming to join the soaps that have been running for thirty, forty years. But but the other shows, which you know, I'm a celebrity and Britain's Got Talent, these do appeal to the core light viewers in enormous number. What you got 10,000,000 people watching the show? It's sort of everybody at some stage. And so the more hits you have, the more you solve every problem that's in front of you. And so really, the challenge is to get more shows like that. On the high fat, sugar and salt, we don't know. We don't know the parameters. What we do know is there's going to be consultation. We're doing a lot of work, as you would expect, from the background with anyone who will listen right across the whole spectrum to make sure that anything is evidence based and fair and proportionate. And we've spent a lot of time on that. And I think it's being listened to. So we haven't we don't know at the moment, so we can't really talk any more about that really. There's just one last question here from Julian, and I've got another hand up over there, so I don't want to stop another question. But after that, we're going to go for a coffee. Two last questions. So Jill, there's one there, Julian there. Julian, I'll call Barclays. When I listen to you, audience is up. The Hub will be amazing. You finally crack advertising, both linear and nonlinear. It's best of both worlds. But if you listen to media buyers, those awful people, your revenue would be zero to one this year. The market is up five to six. So you are underperforming the total advertising market. Money is still going to Google and Facebook. So number one, what is that advertisers don't get from your proposition? And then number two, how long will be the journey to grow in line with the total market? Can we hope that to happen next year, or is it a three year or a five year journey? Sorry. Missed a lot. Missed that too. The sentence? How long will it take for you to convince advertisers of the strengths of your proposition? And when will we see total advertising grow in love with the market? Will it take one year, three year, five year? Okay. Okay. Well, in terms of this year, I guess the thing that we feel more than anything, don't think we feel on a day to day basis that money is moving or dramatically moving from TV to online. The thing we feel more than anything is the uncertainty around the economy. It feels to us much more of a cyclical issue. I'm not saying it's not I guess we're not burying my heads in the sand, but it definitely feels when we're talking to our major advertisers that, that's the issue. They're not in huge numbers moving money from one to the other. So I guess it's about the balance of what they spend on brand advertising versus performance. And what has been happening is that percentage, which most commentators, most industry effectiveness experts would say it should be sixty-forty in favor of branding. It has moved slightly more closer to fifty-fifty, which is what I think we've been experiencing the last couple of years because lots of advertisers have been coming a little bit more short term in their outlook. So I think when can we see that shifting? I do think it's going to be when the economy starts picking up and people feel more confident about the future. Definitely, it's sentiment that is the issue. And just to say that, I mean, the last time you saw uncertainty or in fact much worse than uncertainty, you saw the direct correlation with ad revenue. So there is a direct correlation between political and economic uncertainty and advertisers because it is a tap that they can turn on and off. Now we've heard some advertisers like Charlie Mayfield at John Lewis Partnership saying very, very clearly that he is not cutting back on marketing and that TV will be an absolutely core part of actually them fighting their way out of a very, very difficult time on the high street. So you've got some advertisers will actually spend in order to be able to keep footfall and their revenues up. Others will actually use it to retrench a bit. So I think Kelly is right. Until you get more certainty in the economic environment, the economy is fairly steady it's kind of flatlining. You will see advertising flatlining. It is a direct correlation. What struck me about this your second question, which is when are they going to see it, they do see the strength of advertising on TV, which is why we have 2,800 advertisers. I think my observation would be that despite Kelly and the team's best efforts, the TV industry has not come together until very recently and been much, much more forceful and assertive about why TV is so strong and so important. And I think that, that we will do a lot more of that, I think, both ITV in the lead but also working with Sky and with the BBC and Channel four, just about the power of TV as force. And I think that is when that's necessary with advertisers because having been an advertiser, so having been a client for eight years, I did not wake up every morning as a CEO and think about my media plan. I mean I probably only thought about that once a year. So I think we have to permeate kind of consciousness of people, both at CMO level and at CEO level and indeed at CFO level, because they are often people that say yes or no to money, well, usually every day, they're the ones that we have to get to as well, and we've got kind of plans to do that. Was that there's one more question over there, and then we're definitely having a coffee break. Yes. It's Sarah from Berenberg. It's really just a question following on from you're talking about cooperation on the SVOD side, on the marketing side, but in The UK. And there's obviously been chat from some of the other European broadcasters about potential cooperation across borders. And I'm just wondering to what extent you can say if you see benefits from cooperating with broadcasters outside The UK, whether it be on the content side, on the marketing side or on the tech side? Sure. Yes. So certainly, from a commercial point of view, we see that as a great opportunity. We've got quite a close relationship with RTL. They represent us outside of The UK. They have an international sales team called RTL Ad Connect. So they've represented us for a few years now, but that relationship is getting stronger and we're talking to them about doing lots more stuff with them, particularly we think around ad tech because it seems clear to us that every TV station needs to invest in this, and do it together. That's not just, I guess, across Europe. We're talking to other UK broadcasters about ad tech and about data and about pooling our resources. And on content, you'll hear a lot more later on about how we sell to them right across the world actually, but Europe as well. On that note, coffee break. Could we take fifteen minutes, for coffee? And Jack, follow Jack, and he will also then shout at you to come back in so we stay on time. Thanks very much. Right. Now for the you've had the intermission, so now for the second bit of this. We are now going to hear about our plans for DC. And Julian Ashworth, our Director of Group Strategy and Direct to Consumer, is going to be talking to you, and so will Rufus. Rufus will come back up because he's been very involved in that area too. Julian joined ITV earlier this year to lead the Strategy refresh that you all know about and also to start really helping develop the ITV direct to consumer business. Before joining ITV, Julian was Global Director Strategy at BT. Prior to that, he held various strategy, business development and commercial roles at Relics, Centrica plc and Bain. So first up, Julian? Thank you. Honestly I'd for, ask boy, George, do you really want to hurt me? But we'll find out at the end. As you heard from Carolyn, ITV's strategy refresh has resulted in the creation of a new business area of focus called direct to consumer, and it's really exciting. D2C, I think, really epitomizes the spirit of more than TV. It's not like advertising. That's Kelly's bid. It's not about studios or production revenues. That's Julian B's bid, and he'll come on and tell you about that later. It's about capturing the increasing willingness to pay by consumers to engage with our fantastic brands, content, IP. And we do this a little bit so far. There's some great examples here where we have done some good things, admittedly, but we believe we can do so much more by applying a little more investment, a lot more focus, some technology to drive analytics that will drive marketing to really accelerate all of this in a much more joined up fashion. So today I wanted to just talk about a few things really quickly. I wanted to first give you a sense of what our approach is in this area and what our ambition is overall. And then secondly, because it's ITV and everyone else has shown a video, I want to show a video, bringing it to light from our consumer viewer perspectives. And then thirdly, I want to go into a bit of detail about the current portfolio of opportunities that we're excited about, you'll see in the video, and why we think we can grow them in the way I said. And then, fourthly, Mr. Rufus Radcliffe is going to come back up, and he's going to take you through the latest research that we have on our SVOD proposition and why we feel optimistic about our future in that area. So start off with our approach to D2C. I know I said this is more than TV and it's a new area, and it is, but we really make a virtue out of the fact that we are a free to web broadcaster. It is a huge advantage to start with 50,000,000 U. K. Viewers passionate about your content across the country. And what's even better is that these viewers are the ones who are coming to us for more than TV experiences. In fact, we've got over 28,000,000 so far that have come to us for online hub and portals and competitions, smartphone apps, games and events. And this is great because it allows us to create deeper, more engaged, and most importantly, more valuable relationships. And this year, so far, we've had 5,000,000 monetized customer relationships. When I say monetized, that means it's paid us for something. And sometimes it's one transaction, sometimes it's multiple transactions. And increasingly, we're seeing recurring revenues. The main thing is that $5,000,000 as a number at this stage is big enough to give us confidence that this is a real thing, this is a real opportunity, but modest enough, I think, to give us optimism that there is much more to go for. And go for it, we will. And that's why we've raised our ambitions. If you looked at this area last year, last full fiscal year 2017, I think collectively, the areas that I'll talk about had about £65,000,000 in revenue. And our ambition, as I said, is to accelerate that, to drive double digit growth over the near term to 2021 so we can surpass £100,000,000 of revenue and that's profitable. We're first going to do this by growing relationships, bringing people onto those more than TV platforms that I talked about earlier secondly, deepening engagement and then thirdly, converting them to purchase. The second side of it, or the other side of the coin, is really about growing the value of those relationships, so boosting ARPU, putting more of our IP to work so there's more opportunity, increasing frequency of purchase and then cross selling and up selling. But we're focused on a number of clear opportunities, three main categories. The first two really relate to accelerating and delivering the full potential of our existing portfolio: first, in Hub plus and interactive competitions, where we think there's much more to go for in these established areas and the second is about developing what are today nascent areas, but we think we can develop into something much more meaningful. I'm gonna tell you a little more detail about our plans in those areas, but as I promised earlier, first a quick video about what this will look like for our consumer viewers. ITV is more than TV. ITV is a brand that directly offers our fans great ways to engage beyond the TV show through subscriptions, content, gaming, events, merchandise, and competitions. Each of these interactions brings our viewers closer to the ITV shows and experiences they love. But this is just the beginning. With smart use of data, technology and winning consumer propositions, there are so many more opportunities to build on this, deepen our relationship with viewers, and offer them great trusted ways to engage with ITV beyond their favorite TV shows. But what does this actually mean for our audience? Meet Emma. She's a die hard Coronation Street fan. With ITV Hub, she can keep up and catch up with Corrie. She's also seen that with an update to Hub Plus, she can escape to weather fields even when she's escaping The UK weather, taking her favorite stories and characters with her. Emma also loves a in return for doing it. Where's the third lion note? There. Oh my goodness. Then there is Tony, a family man who enjoys quizzes and big entertainment shows with his two sons and wives. You'll find both him and his two downloads and watches shows on his commute and binge watches his favorite IGB box sets without any interruption. Carly is a student who can't get enough of reality TV. She wants to be in the know when the chat gets started at the union bar, so gets immersed in the action by reading up on the latest gossip, getting involved in the buzz of voting, buying her personalized water bottle, and even playing the game in between lectures. Her dad was happy to buy her a Hub Plus subscription, so at least Carly can watch Love Island ad free, leaving her more time for actual studying. It's our goal to create happy ITV viewers and happy ITV customers too. And with over 28,000,000 and growing verified consumer relationships, there are so many opportunities to grow new revenue whilst creating richer, trusted DTC experiences that our audiences So before Rufus comes up to talk about SVOD and research, I just wanted to go through in a bit more detail some of the really exciting opportunities that were shown in that video. The first was Hub Plus. Each of the three had a different reason for purchasing it. And at £3.99 it's a great feature packed version of the Hub that Faz and Steve showed you this morning, but it really gives more value, ad free, anywhere, anytime, and has done well, but we think can do so much more, through enhanced features going forward, by looking at new ways to price in different packages for different segments, looking at stronger messaging and targeted marketing, and then lastly, just making it easier to acquire on more platforms and also accessible directly through a connected TV. So we're quite excited about that. The secondary is something called interactive. It's also known as competitions. A lot of people think of this as the phone number at the bottom of the screen when they're watching Holly and Phil. And it is that. And that's great, because millions of people engage with it and love it and continue to engage with it. But it can be so much more, and that's what we're doing with it. We've launched an online competitions portal. It's had over a million visits. It continues to grow very quickly. It allows people to engage in other competitions that aren't even linked to the shows. And this year, we've piloted a loyalty rewards program, which gives even more incentive to play along. And in in the last quarter, we're launching a number of show apps that will have embedded directly in them ways to enter competitions that are easier and more enjoyable. And then the innovation is going to keep going next year when we launch rich content services to engage with our customer viewers in a more vivid fashion. And then the last area, the glam area, gaming, live and merchandising. As I said before, these are nascent positions, but we think there's a lot we can do to develop them. So in gaming, we're working with third parties today to take more of our titles and IP into gaming formats. We've had a great success this year with the Love Island game. It's gone number one in The UK, top 10 in over 10 countries around the world, 3,000,000 downloads. It's a fantastic adaption of the show. If you haven't tried it, you've got to get on there and try and get yourself a gold bikini. We're really excited about what more we can do with that title. But it's also just the beginning of thinking about a gaming strategy for us, because there's lots of other titles in our library that lend themselves to these experiences, number one. And there's lots of other formats, whether it's storyboarding, freemium, puzzle, or or quizzing. So we're quite excited about that opportunity. And then in live, this is an area that, actually, as a broadcaster, we've been doing for some time, but we think there's a lot of opportunities to bring fans closer to the talent and to the shows they love, whether it's fan events, exhibitions, experiences, set tours, you name it. And so this year, we've been very busy. We've launched the Coronation set tour, the new set tour experience at Media City. We've added Victoria Street and Community Gardens. It's fantastic. We've also launched an aqua park for Ninja Warrior up in Windsor. And looking forward, we see lots of other opportunities, whether it's building on our consumer events for This Morning, whether it's expanding Ninja Warrior to other formats and other locations or thinking about options for a fan event like Love Island. So great opportunities there. And then lastly, merchandising. This year, we've had 400,000 products sold, but we're just starting. We want to bring more products from more shows to our consumer viewers more easily. And as I mentioned before about the show apps that we're launching in the last quarter, not only will they have ways for consumer viewers to enter competitions, but we're also putting show shops into them to make accessing our products so much easier as well. So that's a really quick canter through the existing portfolio and what we're trying to do in D2C to sort of kick it off. Rufus is going to come and talk now about the research that we're doing about SVOD. Thanks, Julian. So this year, we've commissioned two major independent studies into opportunities for new SVOD services. The first one in March fed into our strategy refresh, clearly identifying an opportunity for an SVOD service with British content at its heart. And in August, we commissioned our largest ever nationally representative piece of online research, surveying over 3,000 adults online. And let me just talk you through headlines. The first thing you see on the left hand side here is the market continues to grow very fast. There are about 11,600,000 households now who've got SVOD. And in the middle, our research shows that 23% of existing SVOD subscribers would take another service in the next three months. 10 of non SVOD subscribers would and 16% of all adults. And that is being prepared to take another service just in the next three months. And in number terms, on the right hand side, you can see that means 3,900,000 households, 2,300,000 of whom were interested in the range of propositions that we tested with them. And if you look at the drivers of the uptake, you'll see quite clearly on the left hand side, the importance of British content. 42% of respondents said it was a key driver for them. And you can see the power of our British content, in the middle section, where you can see that 47% of all adults and 30% of Netflix subscribers said that Britain has the best content, which is much higher than figures for The U. S. And we had, as we always get with research, we had some great colorful verbatims here. Good British drama is excellent. It's easier to relate to and generally of a higher quality than U. S. Imports. And here's another one. I know there's loads of brilliant British TV I've missed in the past but have no easy legal way of watching it now. So we were really, really encouraged by this piece of research. We've done it twice this year, and the results show that there is a really fantastic opportunity for us in this space. Back to you, Jean. Yes. We'll just close it off. The research is quite clear, I think, about the opportunity. I think there is a gap for service focused on UK content. And I think as ITV, we think about our pedigree and believe that we should have a right to play in this gap. We've got fantastic commissioning pedigree in The UK. We've got fantastic assets in the viewers and those that are coming onto our platforms as a sales funnel. And we're investing in the data to really make this come alive. So as Carolyn talked about at the start, there is an opportunity here. Our approach, of course, will be phased. It will be pragmatic and focused on value creation, and it will absolutely focus our right to play. And I would just emphasize, this is the same right to play, not just for SVOD, but the one that supports everything we want to do across G2C. Thank you. Thanks, Julian. Now Julian, you're staying with us for the next section. You may want to sit down, but I'd also like to introduce now our group CTO, Mark Smith. Mark joined ITV in 2011 as Chief Technology Architect. He was promoted into his current role in 2015. Prior to joining ITV, Mark held senior technology positions at the BBC, BBC Worldwide and Sky. He actually worked on the original iPlayer. Mark started his career as a software engineer at BC R and D. So I'm really, really pleased to invite both you're both coming up or you one of you is sitting down, one of you is Either coming way, I'll come up. So the strategy refresh that we did at start of the year identified a number of opportunities for us to accelerate our more than TV strategy by doing more with data. And to do this, we had to lay out a new vision, to make data analytics a key competence across the organization, developing deeper, more joined up, more actionable insights about our customers, viewers, advertisers across all of our platforms and all of our relationships where possible. And to do this, we identified a number of enablers that were really going to be critical. And the first was just about getting more comprehensive data about those relationships, consumers and viewers, and building bigger, deeper, richer data sets. The second is about making sure we had the fit for purpose technology platforms to collect, to process, to store, to analyze. And thirdly, it was about having the right organization, leadership and skills so we could turn data into insight. And we're not just doing data for data's sake. It's not the flavor of the month. It's about really focusing on our strategy and the priorities that underpin it. So first and foremost, maximizing total viewing across all of our platforms, as Carolyn said earlier. And secondly, it's about converting that viewing into the most value we can for advertisers and creative and advanced advertising solutions. Then lastly, further to my previous presentations, about making sure that we can grow a successful D2C business. Okay. So I'm going to talk about the first enabler. So developing deeper, richer and more actionable data sets is the starting point for our data strategy. But we already have some real depth today, primarily the data that we collect around ITV Hub, where we now have unique ITV IDs for nearly 27,000,000 viewers and together with some really useful profile data about those viewers as well. Every day, we supplement this with real time viewing data, about 1,000,000,000 real time events, every play and pause by device. But this is just the start, and we think there are real opportunities to collect more valuable data. First of all, we need to enhance our vast hub data with set with stronger profile data, so we can better serve both our users and our advertisers. We need to build stronger data sets around linear TV viewing by developing relationships with partners, platforms, connected TVs, making data access a real priority in all our relationships where it has not been previously. We also need to bring together other siloed data sets that we collect from around the company. Interactive is a really good example. So together, we can be more insightful and actionable around that data. I'll talk a bit more about how we're going to do that in a minute. And last and by no means least, all of this will require the right permissions to ensure that all our activities are consumer friendly and compliant with GDPR. So next, I'm going to talk about the second enabler, which is technology. This is the sexy bit, so hold on to your seats guys, from my perspective anyway. So over the past couple of years, we've built and launched an audience data platform that we're really, really proud of. And we're proud of it for two key reasons. Firstly, it does everything that a really good data management platform should do. It captures, as I mentioned earlier, 1,000,000,000 real time events from ITV Hub every day, and it uses real time algorithms to cleanse this data and then store this data. It stores all this data and then matches it to the unique ITV IDs that we mentioned earlier. We've also selected a number of tools to help our teams both analyze and gain insight from that data. And key off the shelf tools like Tableau, Alteryx as well as lower level access by languages such as Python. It can also interface with other data platforms such as advertising DMPs to help enable our advanced advertising ambitions, which I'll talk about later. The other reason that we're really, really proud of this data platform is the fact is the way we've built it. It's been built using off the shelf cloud based components from key partners, the kind of guys you'd expect, Google, Amazon, etcetera. And as a result, it's secure, it's robust, it's cost effective and most crucially of all, it's extremely scalable. So we're in good shape from a technology perspective, but we're not standing still. As I mentioned earlier, we will be scaling our data platform to collect linear TV data as well as pooling data from other sources such as our interactive services. We'll also be reassessing our technology suppliers and partners, ensuring that we stay in control of our own road map, but we continue to get the best out of the products and services provided by those partners. Lastly, we will continue to standardize the way that we interface with external data platforms, making it easier for us to partner with other data providers going forward. Back to Julian. The third enabler, I think, is perhaps the most important. Because if we've invested in the data sets, we've invested in technology, but we haven't got the people to turn that data into Insight Gold, then it's all for naught. And so it's really critical that we address that. And the first step, I think, is about changing the culture from a business that has always thought of data as a good way of supporting itself to one that is absolutely focused on using data to drive its strategy and decision making. And secondly, if data is going to be something that is a key organisational competence, then it's got to influence our organisational design. And that's why we've made the decision to set up a centre of excellence focused on data analytics, pulling together all of the disparate analytical teams we've got across the business, looking at different data sets and different parts of the viewer customer journey into a single unit that's got the scale, the scope and the skills to really drive our strategy forward. And I'm really happy to announce, unfortunately, she can't be here today, that we have appointed Corine Surferti to be the leader of this new team. She's going be our Chief Data Officer. She's joined us this month. She's got a fantastic background. She was Chief Data Officer for The New York Times. Prior to that, she had a long career in the top tier of consulting, working with leading media companies on data and strategy around the world. And so she's got a fantastic wealth of experience she brings. I'm really looking forward to working with her. And of course, to support her and the rest of the business, we've already started building out the teams in the Centre of Excellence. We're already recruiting the data scientists to get this going. And of course, we've got more to do, but we've started. I'd like to spend a bit of time now talking about the priorities for this team and actually what we'll focus them on. So as I said earlier, the first and most important priority is about maximizing viewing across all of our platforms. And you can really look at this in sort of two halves. The first half is about exploiting data to drive reach, engagement and frequency of viewers coming to our platforms, primarily the hub. And we'll do this first by using CRM to drive targeted marketing and targeted messaging to bring more visitors to the platform. The challenge, though, is actually converting a lot of these visitors into viewers. And therefore, data can also help us by optimizing and designing the estate so people actually engage in the content. That's the first half. The second half is then having gotten people to view, how do we keep them? How do we increase the dwell time, as we said earlier, the session time? And that's about having the algorithmic recommendations for the next thing to watch, the personalization to keep them in it. And those two things together are really going to help us maximize viewing. And Mark's going to talk to you about how we turn that viewing into more value for advertisers. So our second priority is enabling advanced advertising. So my technology teams and I have been working really closely with Kelly and the commercial teams on how to utilize data analytics to enable better advertising solutions. As Kelly mentioned earlier, from a VOD perspective, we already use our unique first party data to provide a range of products. Around 50% of our Bot inventory is already targeted. As we continue to augment our data sets and enhance our data capabilities, we will be able to create higher value addressable audiences, improve routes to buy and we'll be able to launch new exciting addressable products. A good example of this is reach extension, where we'll be able to extend the reach of our linear campaigns through addressable broad audiences. All of this will be supported by a suite of data driven and increasingly automated attribution products and that our advertisers will be able to use to accurately measure advertising delivered across platforms and also reinforce the value that they spend with ITV. Also, as our VOD capabilities mature and all TV devices become connected, we will start to enhance our capability to target our audiences on linear TV. So the last priority hopefully came through in our previous session around D2C, and data is absolutely critical to driving the success of this area. First well, there's really four aspects to it, and it's sort of a virtuous cycle that work together. But the first is about using data to really design and create the best products and experiences for consumer viewers. And today, we're doing that already using multivariate analysis to help define the user experience, starting to experiment with AI to improve the graphics, etcetera, but overall make more compelling products driven by data. The second aspect is in having created a great product, how do we bring relationships to it? And so we're looking at ways to get deeper segmentation driven by data that, again, improve our targeting, marketing, our tailored messaging to drive higher response rates and importantly, lower the cost of acquisition to bring new relationships to us. And then thirdly, having got that relationship, how do we grow the value? As I said before, that's a critical part of the D2C strategy, growing ARPU, cross selling and up selling, etcetera. But using data like behavioral analytics will help us figure out how, for example, in interactive competitions, our top segment has a value of 2.5x the average customer in that base. How do we add more value to those average customers to migrate them into the top segment and create value overall for us and them? And then lastly, having done all that hard graft, how do we use data to maintain the relationship, to mitigate churn, to increase retention and loyalty? And we're starting to think about predictive modeling and other ways to help us do that. So four things that really work together as part of D2C. But overall, as I said before, data is not about D2C, it's about the whole part of our More Than TV strategy. And I just summarize by saying it's absolutely critical. We know what we need to do in terms of priorities. We know what we need to do with enablers, and we're getting on with it. Thank you very much. Great. Thank you all very much. I'll just could Mark, Julian and Rufus, could you come up and answer some questions? You don't get away with not answering some questions. Are there any questions on that session? Claire, we'll come to you. Sorry. So let's say I got home tonight and I talked to Mrs. Shelton and say, I've just seen a a teaser for strangers. It looks fantastic. And we decided to watch it on our Samsung TV, and you talked about addressing advertising direct to the consumer. How far away are you able are you are you currently standing at in being able to target me and our family as subscriber? Because at the moment, I can't see how you can get through Samsung's interface. Great question. Who wants to take that, or do you want Faz to answer that? I think Steve Ford would probably be the best Steve to answer Ford, one of you. Howard. On Steve, stand up. Just have to shout a bit because remember this is being streamed? You touched on a really core issue for us to be able to make sure that we are able to recognize people in shared homes. And I think when you see what Netflix have done in terms of kind of multiple accounts, that might be a direction that we will take. Again, we'll test that to be able to understand it, and then we'll be able to see who is actually using the device at that particular moment in time. But that could be through a multiple of kind of either they are individually signing in or there's other technology that can recognize that the person's in the room. So just to add to that, sometimes the most important thing is not to know who you are as a person. But for example, we were able to target Love Island fan events to people in certain areas who'd watch Love Island or Emmerdale. So actual identity is less relevant, but actually what you're interested in is the key point. Makes sense? Did you watch Strangers? Watch. It's really good. Right. Oh, Claire? Claire Enders. Thank you. What I wanted to know, Julien, is really for those of us who have this extraordinary historical memory and lived through the real time ITV digital fiasco, how you can stop your ambition from taking over basically your limits. And I mean, particularly because in The UK, we're seeing with now and its acceleration, we're really seeing some about GBP 150 to GBP200 million of marketing spend behind that brand. And it's not advancing particularly fast despite having Game of Thrones and everything else. So I'm just wondering whether you have a specific budget and you will not exceed that specific limits, specific targets to avoid the obviously, the terrifying situation we lived through in the late '90s. So can I just clarify something? Are you talking about our SVOD proposition? Sorry. Yes. So I think we won't go into that in any detail. Rima's over here. We can talk to you in the round about that, but I think we'll need to wait until we've actually done the planning and the budget for that so that when we are ready to disclose that, we are absolutely going to be ready to answer that question. The only thing I would say is that we do have a huge amount of our own airtime to promote our own SVOD service, and we have millions of people watching that where Sky don't. I mean Sky are probably the biggest advertiser in The U. K, and the reason for that is their audiences on Sky are very, very small. But they're subscription based services, so it doesn't really matter that much that their audiences are very segmented and very small. So that's the only thing I'd say. I think what they're doing on Sky's platform for now is very different to what we would be doing for SVOD. But I think more on SVOD when we can actually disclose some of the detail behind that, but it's an obviously good question. Over there? Seeing where to go from Liberum. Just on sort of the SVOD sort of research that you've done, sort of what sort of the evidence so far in terms of people taking multiple SVOD services, in terms of their willingness to do so, and also as well whether you can sort of give an idea of how much, if the research, if there is any research on it, sort of how much they're willing to pay for, sort of in total, for multiple SVOD services. Yes. I don't think we're going to get into the details of pricing and stuff. But I think one of the 23% of existing SVOD subscribers said that they were willing to take another subscription in the next three months. So I think one of the big things coming through from all of this is we're not trying to this isn't substitution or we're not asking people to stop doing one thing and start doing another thing. We believe that there is a marketplace for this to be an additional service for people rather than asking people to swap out from something else. And that came through really loud and clear. And I think the Deloitte's research actually that I commented on earlier it only came out yesterday. And we don't work with Deloitte's, okay? So from a research or consultancy point of view, we don't work with them. But I think it would be worth I mean, we might try and circulate to all of you the Deloitte's work because it touches on this, and it does quite a lot of analysis on how many an individual is willing to pay for. And I think they said something like eight to 10 smaller value subscriptions that families are quite willing to pay for. And their research also showed that kids are getting they actually did the average pocket money for the average child, whatever that is. And they said it was actually £16 a week or something like that. And then they actually said so and yes, my kids don't get that. Don't worry, Matt. I'm in totally agreement with you. But however, this was the research that they did. And what they said is many kids will subscribe in the same household as parents will subscribe because if the price point is right, the parents won't even know the kids are subscribing. So actually, we will perhaps try and get to many of you the Deloitte stuff, which I think reinforces a lot of the research that we've done on our own. Just to add, you framed the question around existing subscribers' willingness purchase a third, and we have seen the research that people have two or more or have a propensity to purchase more still. We're also seeing interesting research that's telling us that people who haven't purchased one yet, one of the reasons is the propositions out there just don't have the sort of content, particularly U. K. Content, that's going to make them want to. The second thing I just observed is I'm paying my kids too much pocket money, but Or too little for me, but that's because I'm weak. Okay. There's another question there. Think that's from Sarah, I think. Yes. It was just a question on your DTC target of £100,000,000 Given where you were for 2017 and the growth you've delivered in the first half, it strikes me that it's not a very ambitious target. Is that I mean, if you were going to give us a sort of bull, bear and what kind of numbers would you be coming up? Because 100,000,000 doesn't require you to do I mean, I'm sure it's I let it's quite too hard internally, but it doesn't seem Well, like that harder number to get every all revenue is hard revenue, I think. But I we'll answer that question. And do there was £100,000,000 plus. So it's a target, but it's not our internal target. I'll hand over to Julian. It's not our view, not what we're striving for internally. Yes. The financial target is important, as you say. I think the most important thing, though, is actually going to build a sustainable, long term scalable business that has the technology and is more joined up than the assets today. I think £100,000,000 is sort of the floor we're setting ourselves in terms of aspiration, which still is double digit growth in what is not the most buoyant economic world. But if we can go for more, we'll go for more. And absolutely, that's how we're thinking about it. There's one more if not. It's Giovanni Solati from Macquarie. Just a couple of questions on AdVot. In terms of data, do you have enough data just internally, or do you need to buy outside? I remember when Sky started ArtSmart, they made quite a sizable acquisition in terms of just getting the complementary data to be able to target appropriately. And secondly, on pricing, when you sell targeted advertising for the same audience, so say, an age bracket or whatever, what kind of price do you get relative to the same audience non targeted? So did you hear the second question? I'm not sure I heard the first, actually. No. The first question is, can we just do the data internally? The answer is no. We have got a lot of data internally, but Julian can talk about Data that we I mean we do already acquire some data, and sort of the same stuff a lot of people do. But I think on all fronts, there's more we can do. We can do more in just actually collecting and processing our own internal data. We can do more, and we are doing more with partners to make sure that the relationships we have with them are proper partnerships, not just about cash, but actually include data so we can improve the viewing experience for their customers. Do we need to buy in lots of other data? I don't think that's the highest priority for us. Okay. Sorry, just on the second question, I realize it didn't come through very clearly. I mean if you look at aggregated audience online and if you break that down and then you reproduce the same on targeted advertising, what is the like for like comparison on pricing? Probably a Kelly question. On price, sorry. Think if I understand the question, are you saying if you look at how much we make up a customer from a from an online subscription product versus an online ad? Or I I missed the question entirely. Ad VOD, if I re aggregate the targeted audiences to recreate a a audience, what is the like for like comparison in terms of pricing? No. So I think that's an advertising question. Yes, it is. No, that's fine. That's absolutely fine. Kelly? That's a nice easy one. We have talked about this, though, quite a lot. Well, look, our way we kind of our VOD advertising, we have a flat fixed you Kelly, just come up here and answer the question. Sorry, it's just because of the So we for nontargeted advertising, we sell kind of a flat fixed CPM. And then depending on what people want to target, we build above that premiums, but it all depends on what they want to target. So we do buy in based data sets to target to create some audiences. And we have to as part of the deal we do with the advertiser, there's a small percentage of payaways in order to pay for that target. So I think your question was that Sky bought in acquired companies to create those data. Buy in on a campaign by campaign basis these days. But I don't know whether that answers your question or not. Well, put another way, if you were to sell all of your audience as targeted rather than as mass, would you price up or price down? Price up. Price up even knowing that you have much more competition on target advertising that you'd ever have on mass audience. Nobody else offers mass audience. Yes. We are pricing up now. If advertisers want target, they pay a premium to their flat price. Thank you. Yes. Thank you. If there are no more questions, I'd like to get on with the next session because we're running just slightly late. I'd now now every team thinks they're the sexiest content, right? So I'll just stop them saying it because they're bound to say that when they get up. But I'd like to introduce our Studios team. First, Julian Bellamy, our Managing Director, ITV Studios. Julian joined ITV in 2014 as Managing Director, Studios business. In The UK initially, he was promoted to MD of ITV Studios globally in 2016. His previous roles included Creative Director, Head of Commissioning at Discovery Networks International, Head of Programming at Channel four and prior to that, he ran BBC Three and E4. David McGranah, Chief Finance and Operating Officer. David joined the business in 2011 from Tui Travel. He spent seven years there in a number of strategy, M and A and commercial finance roles. And he actually started his career at Close Brothers, where he was an investment banker. Dave George, CEO of ITV America David became CEO of ITV America in January 2017. Prior to that, he was CEO of Left Field Entertainment, which ITV acquired in 2014. David joined Left Field in 2010, having begun his career at MTV. And last but by no means least, Maria Kiriaku, our President, International ITV Studios. Maria runs ITV Studios production companies across Europe and Australia and U. S. Scripted business as well as Global Entertainment, which is our distribution business. Maria joined ITV in 2010 from The Walt Disney Company, where she was Senior VP, Digital Media Distribution for EMEA. So welcome you all up to the stage. For some reason, we don't get music. Do like me? No music for studios. Not taking the first thing. Thank you. Seamless. Okay. So hello, everyone. I'm going to spend the next forty five minutes or so giving you, alongside with the team here, an insight into the studios business, our business model, our culture. We're going to dive into a couple of specific areas for you in a little bit more detail. Dave George is going to give you a bit more detail on ITV America, and Maria is going to go into a little bit more detail on the international production and distribution business. But to kick things off, I want to make one big contextual point right at the beginning. You're going to see a lot of charts, facts and figures over the next forty five minutes. But throughout it all, it's very important for you to remember that the success of studios, first and foremost, flows from its talent and its creativity. Great talent, developing and producing great shows in the right culture, is the first foundation stone on which everything else is built. We're very fortunate in studios to have these qualities in spades, and this year is a great example of that. Take this entirely randomly selected selection of shows. If you see the top left there, drama. Let's talk about drama. Bodyguard, a huge hit made by World Productions, one of our one of our indies. The highest rating drama launch in The UK for over twelve years. Bigger at launch than Call the Midwife, Downton Abbey, bigger than Sherlock at launch. In entertainment, you'll recognize those guys there in the second box. Of course, that's Love Island, the breakout hit of the moment. Just sold to CBS in The US, rolling out to nine more territories with more to come. The five snappily dressed gentlemen in the third box, you may recognize that's Queer Eye. Not a controversial thing to say that it's been the talked about show on Netflix, the talked about entertainment show on Netflix this year. Just scooped three Emmys, what, ten days ago. And then in Europe, the guy with the gun, it's the launch of our critically acclaimed crime thriller, Sabura, on Netflix made by the brilliant team, Kat Leia, based in Rome, very much at the vanguard of the growth of Netflix's push into non English language drama. And on top of all of that, of course, this is the year where we've also produced some of the biggest returning series on TV from The Voice to I'm a Celebrity. And underpinning all of that, of course, are the big banker shows, the cornerstones of The UK business. Daytime, The Soaps, stronger than ever, ratings up year on year. To give you a flavor of that strength and depth right across the group, take a look at this tape. Well, you'll find it if you don't sling you up. Have you got a nibbit yet? Good morning, Brenda. It's nice to be back. I wish to be called Victorian. You'll be sure of it. I love it. Is it George Quinnie again? Will you tell him to stop bothering you? George. Board of charges. Raise your hand if wanna you break some stuff. Why? Is he ready? What's going on? They're about to walk out. Is that a chest bump? This is not ill times, the three amigos. Can we all focus here? Are you falling in love with me? That's pretty intense. You got this. Sometimes you've put all you are against all they've got. You guys, you know that. I'll do this for quiet. Okay. I actually love that tape. So I'm just going to pull out a few highlights for you as an overview of the Studio business. The first point at the top here. I mean really, the point here is that over the last few years, studios has transformed into an international business of real scale. If you look back at 2011, the revenue outside of The UK was about 38% of our total revenue. Today, that's at 57%. And with shows like The Voice, Hell's Kitchen, The Chase and others, we're particularly strong in unscripted, and we're growing our international scripted business apace, reflected by the fact that when I look at the three biggest dramas across the group next year, one's from The UK, one's from Europe and one's from The U. S, and that's reflective of how much the business has shifted. That international scale is important partly because it means you've got more creative talent, narrowing the odds of coming up with more great shows, but also it enables us to better monetize the value chain of the shows that we create. And a really good example of that is international production. So today, with a show like Love Island, we're able to produce that show ourselves in all of our key markets and capture the full margin accordingly. If you rewound the clock back six, seven years, candidly, we didn't have in some of these markets the capabilities, the talent base, the credentials to do it on our own, which meant that we had to partner and work with local producers in market and share the profit accordingly. Our scale today means that we don't need to do that anymore. If you look at the second point, the context for the second point is that The UK is an extraordinary and key creative market, punching well above its weight on the international stage. 35% of the world's top formats come from Leashores, half of the top 20. And in that market, we, the Studios Group, have a big competitive advantage because we're part of an integrated producer broadcaster. And the real value of that lies in a very special, very close relationship, an inside track into the needs, the wants, the mindset, the opportunities at the network. It's, frankly, access that any other producer would kill for. And its success is reflected by the fact that we win almost 66% of everything that network commission and that seven of the 10 highest rated shows on the network are made by us. That success only comes about by being part of an integrated producer broadcaster. The third point, I've talked about talent and the importance of it. Today, that talent is spread across over 50 different labels. And I think the point here is that over the last few years, we've had a major focus on building our creative strength and depth, not just in The UK, but in The U. S. And internationally too. And you'll hear more about that from Dave and Maria in the next few minutes. As a result, our creative talent base is stronger and more diversified than ever. And again, that's important partly because it helps narrow the odds of developing and producing more world beating shows, but also because it enables us to better sell and monetize our catalogue and our IP library in the markets around the world. The fourth point, really the context for this point is a very where I'm sitting from a very exciting time to be a producer. We are operating in a very profitable and attractive market. In 2017, for example, for approximately $53,000,000,000 original content spend in the top 25 markets alone, growing at around about 4% or 5% per annum. It feels that there's more appetite than ever for quality content. At a global level, what we're seeing is traditional linear players spend broadly stable and the real growth being driven by the FANGs and other new OTT players with deep pockets. And you can see, look, I could have picked sure you'll be very familiar with this trend. We could have picked any one of a dozen different charts. But this shows the increase in spend by Netflix and Amazon. And we know if you look at 2019, that trajectory continues. Even bearing in mind those numbers that you're seeing on the screen there are they cover both originations and acquisitions, these are huge increases. And that's before you factor in Facebook, Apple, Hulu, some of the new players like Jeffrey Katzenberg's new TV, new SVOD mobile service launching in year, year and a half. And the good news for us is that a lot of that spend is focused on the genres that we're strongest in, drama and entertainment. And interestingly, what we're also now seeing are other opportunities emerging, at least in part, in response to the rise of some of the new global players. And a good example of that is the rise in the appetite for local drama in some key European markets amongst the linear players. And Maria will talk a little bit more about that in a few minutes. The other good news is that we're very well placed as a group to take advantage of these opportunities. We have production bases in 12 countries. You'll be glad to know we're not there by accident. We look when we're looking at establishing production bases, we look for at least one of these two criteria. One, that we want to be in the world's most creative markets, the markets that are most likely to create IP that travels, particularly in entertainment drama because we know they're the high value genres. A good example of that would be The UK, Holland, The Nordics. Second criteria is that we want to be in the biggest and most attractive production markets. So markets that have a scale that means that we don't just produce our own versions of or our local versions of our ITV formats, but also big enough that we believe that we can make good money from purely local commissions. A good example of that would be France or Germany. One other point on this chart, I think, worth mentioning is you can see from this chart alone the sheer scale and size of The U. S. Market and its importance accordingly. And that will be something that Dave will talk a little bit more about when he talks about the American business. Now if you look at studios through the lens of its customer base, one of the other big changes over the last few years has been the increasing range and diversity of our buyers. For example, in production, we've seen an almost 40% increase in our customer base in the last four or five years. And that spreads that customer base spreads across both free to air and pay, across different geographies, across linear and OTT. And even in The UK, you can see that diversity. So this year, for example, in drama, we're making more drama off ITV, channel four, for the BBC, for Sky, than we are on ITV. Again, that's reflective of how diverse the group has now become. And that diversity is important because it enables us to weather cycles, the ups and downs of individual buyers. It gives us stability. If you look at the group through the lens of our program portfolio, it's essentially the same story. A lot of range and diversity, no one single program capturing more than 5% of our revenue. And again, that's important because it enables us to weather those cycles and the ups and downs of individual shows. It means we're not reliant on any one single program to drive the business. So in terms of how we manage the group, this is a handy way to see it. It's not an org chart, but it gives you a sense of some of the big divisions. You've obviously got The UK group there with 24 different labels and indies. You'll have Maria, who will talk a little bit later on about the international production group. Obviously, Talpra, an absolutely key part of that, And our monetization and distribution arm, Global Entertainment. And in The U. S, we separate The U. S. Into two parts. We have an unscripted business, ITV America, run by Dave George, and we also have a U. S. Scripted group. Now at the half year, we made it very clear that we're not seeking a scale acquisition in U. S. Scripted. Instead, we prefer to focus on building our fledgling independent scripted studio group. Now the best way to think of that group is think of it as a vehicle to where we invest and back creative talent, great scripted talent in The US. People like Marty Adelstein, co creator of Prism Bake, has Tomorrow Studios part of our group. Jason Blum, probably one of Hollywood's hottest producers at the moment, the man behind films like Get Out and The Split, or Circle of Confusion, the exec producers of The Walking Dead, all part of our group. They've they've part they've joined a group that offers something very different, a different brand, a different culture to The US majors, something that combines an independence of spirit and creative autonomy with the disciplined and careful use of capital. And David McGraner will talk a little bit more about that in a few minutes. The point I want to make here about The U. S. Is that we're feeling very encouraged by the creative pipeline. And a good example of that is a show called Snowpiercer next year. Big, big, Probably our biggest and most ambitious drama to date. It's a dystopian thriller set in a post apocalyptic ice age. It's launching on TNT. Yes, really. Launching on TNT next year, and it's rolling out on Netflix as well internationally. And I think shows like that are emblematic of the ambition that we have in the scripted group. And we're seeing the creative pipeline, and we're confident there's more to come. Now if you look at it through the lens of our individual labels, we have, as I mentioned earlier, about 50 over 50 different production companies and labels. Now make no mistake, these are not 50 separate businesses. Whether you're in London or Sydney or Stockholm or LA, everyone in the group shares the same three part culture, the same three part philosophy that connects and binds and drives value across the group. And it's this culture that's at heart of why talent want to come to studios and why they want to stay. So I'm going to briefly give you a sense of what those pillars are, those three pillars. One, creative autonomy. We want to work with world class creative talent who share the same ambitions as us, to create and produce world beating shows. We also believe that to get the best out of that creative talent, they need to be empowered with a sense of creative freedom and independence. The best ideas, generally speaking, tend to come from smaller, dedicated teams of people who completely trust each other in what feels like their own creative and entrepreneurial culture. That's the story, broadly speaking, of an awful lot of hit shows on television. And the key to managing that is mutual trust and respect. It's about relationships. It is a relationships business, relationships sometimes forged over five, ten, even twenty years of working with each other. Second one, second pillar, the global commercial mindset. Creative leaders in our group know that they have at their disposal a machine to take their show, sell it around the world, monetize it to the max. That's where International Studios, ITV America, GE, they all play such an important role. This way, creative leaders in the group get the best of a sense of independence and creative autonomy, a sense that they feel local, but they also get the best of being part of a big global organization. The third and final pillar is a strong role for the center. To be clear, we are not absent landlords. It's actually, generally speaking, not what creative talent wants. Actually, they want to be challenged. They want to be supported. They want to be connected by us. And we do that in two broad ways. First, we have a culture of risk and performance management from the center embedded in a variety of formal and informal processes. Second, we have a culture of collaboration, where we use the group, its reach, its scale, to drive additional value throughout the group from a central formats team pushing ideas and shows around different territories all the way through to joint development deals between different drama companies in different countries. These three pillars are the cornerstone of our culture and one of the big reasons why we've had so much success in attracting talent and retaining it. So that gives you an overview of Studios. I'm now going to hand over to Dave McGraner, who's going to talk through the business model in a bit more detail. Thank you, Julian, and good afternoon, everyone. As Carlin said in the introduction, I joined ITV just over seven years ago, so I guess right at the beginning of our international growth strategy within studios. And so I've been very fortunate to see firsthand how much the business has changed in that period from what was very much a UK centric production business to the international content business of scale that Julian has just described. And in that context, are three things I'd like to cover this afternoon. Firstly, have a look at how the financial shape and scale of our business has changed in that period. Secondly, look, dive into our operating model in a little bit more detail, give you some insight into how and where we make money, how that can differ across different genres and different activities, where we take risk in our business model and how we manage that risk. And then last but not least, use two very simple examples to illustrate how we can make more money from the great content that we produce by having a scaled IPB model in The UK and a scaled international content and distribution business internationally. The scale and shape of our business has changed dramatically over the last six or seven years, you can see that on the chart behind me. Revenues increased 2.5 times to just under GBP 1,600,000,000.0 last year. The profits have tripled to GBP $243,000,000 in 2017. And there's been growth right across the business, UK international production and our commercial and distribution activities. And the changing international nature of our business is reflected, I guess, in two key facts, and I think Julian mentioned it earlier. In H1 of this year, 57% of our business came from non UK sources. If you wind the clock back six years ago, back to 2011, that percentage was about 38%, really representing and I guess, a that we're in 11 international countries now as opposed to five back then. Now acquisitions have clearly been an important part of that growth story. But even if you back out all of the revenue associated with all of those acquisitions since 2011, our underlying business has grown at about just under 7% on average per annum over that time period. Now as you can see from the kind of blue part on the bar chart, that growth hasn't always been linear, so there have been lumpy years. And that really reflects the fact that the delivery schedule of some key shows can move between financial years. And as we recognize revenue on a delivery basis rather than as we produce the show, when a show moves between financial years, it can actually distort the underlying growth elsewhere in the business. And when that happens, that can be incredibly frustrating for us as a management team at the headline revenue level. But we judge the underlying health of our business really on the kind of health and visibility we have on our secured revenue, and we have good visibility in this business on secured revenue and on the health of our pipeline of new and returning shows rather than worry too much about whether a show or a couple of shows delivery schedule slips between financial years. So before I finish on this chart, just returning to acquisitions for a moment. They've been absolutely key to a growth story. They've been fundamental to repositioning and growing our market share and market position in some key international markets. They've been fundamental to bringing in some fantastic new talent into the group, scripted and unscripted, and bringing some fantastic new shows, many of whom have been showcased in the various showreels you've seen earlier. Financially, they've also delivered a return on investment in excess of our cost of capital, very importantly, so 13% ROI in 2017 and over a three year period, just over 12%. So it's a very quick counter to how our business has changed financially. I want to now talk a little bit about our business model. Our business model starts with the creation of new ideas. Everything flows from that. And those ideas are hatched in each of the 50 plus labels that Julian talked about earlier. It's those teams, those development teams, it's their responsibility to come up with the next pipeline of new ideas. And while there is some central coordination, we really rely on their creative great capabilities to come up with the next new ideas. So just to give you a sense of the scale of activity in this area. I looked across the last two years, we created two thirty new shows and sold two thirty new shows on average each year over the past two years. Our labels spend between 13% of their revenues, reinvesting back into development activities. And you'd have seen from previous financial presentations, a key feature of our business is that not every show we create will come back every year. And so if you look kind of the last years, 2025% of our business doesn't return the following year. So it's really important to have a strong creative pipeline of new shows and returning shows to not only replace those shows that naturally don't come back, but also grow the business. The labels are also responsible once they've created their ideas to sell those ideas to the local broadcasters. And at the end of the day, they are the ones with the best relationships with the commissioning broadcasters. They are the ones with the passion for the show that they have developed and created. And when they sell that show, ultimately to produce that show and make a healthy gross margin for doing so. And I'll talk a little bit about how that margin can vary and some of the drivers behind that in a moment. As shows are being developed and produced, we have a creative networks team that's looking right across the development and production pipeline, really trying to identify those shows that it believes have the most potential for international exploitation. And they will work then with Marie and her team in global distribution and with the local production entities to figure out the best strategy to take those shows to market. And we could sell a show internationally in two broad ways. Firstly, as a finished tape sale. So good a example of this would be Victoria UK drama, we sold into 191 countries internationally. Second, and this tends to happen more in entertainment and factual formats, we can sell the format right to produce a local foreign version of that show internationally. And where we do that, we as the IP owner would expect to get paid between 57% the cost of producing that show as a format fee. And better still, if it's in a country where we have a production base, we'll produce that show earning a healthy production margin on top. Throughout the production process, our commercial teams are constantly looking at ways to monetize and build extra value around their shows, whether that's in sponsorship or product placement, and you've heard Kelly talk about that earlier on, whether it's in merchandising and licensing activities, everything from water bottles on Love Island through to licensing the Hell's Kitchen brand for restaurants in The U. S, gaming, digital apps, YouTube channels, competitions. If there is a meaningful way to make money around our IP, our commercial teams will find it. And to bring some of this alive, I just want to finish this slide by talking about a show called The Chase. And I think this week, the Prime Minister said it was her favorite show. So quite nice timing for her to mention that. So this is a show, it's it was first developed and shown on ITV in 02/2009. It's produced by one of our labels here in The UK. It's still on air in The UK. It's doing very, very well. But it took three years before that format sold internationally, and that's not unusual in this space. It's now been sold in 12 territories worldwide. We've produced it in four. The UK and Australian version of the show has been sold internationally, and we have a growing stream of income coming from everything from gaming, digital apps and books, etcetera. So where we make money and how we make money can broadly be boiled down into put into two big buckets. Firstly, creation and production of our shows from which we earn a gross A production margin and secondly, the subsequent monetization of that of those shows where we own the underlying IP. Now production represents about 80% of our business. We're the largest producer of unscripted shows in the world, so we make a lot of shows. So over six forty new shows produced shows produced, new and returning, produced last year. And each of those shows is unique. So the gross margin we make on every show is different and can vary depending on the market, the buyer, the genre, whether it's a new or returning show, whether it's a five f order or a 20 f order. All of those factors play into the mix of how much we make on any particular show. Now as a general rule, new shows tend to be lower margin in the early years than returning shows. And that's because on returning shows, the production teams have figured out more efficient ways of working. You don't have the set of costs of a first run show. And longer running shows, because of the scale efficiencies of having a longer order, tend to be higher margin than shorter order shows. Given the large range of shows we produce across the group, I won't surprise you to know that we have quite a wide range of gross margins on our shows. So looking at the portfolio from last year, the typical range of gross margin, production gross margin is between 1030%. There are some outliers on either side of that, but that's broadly the range we work within. The second bucket, monetization, really relies on our ability to create and own underlying IP. And I talked about some of the activities that fall within monetization activities earlier. And while this is only 20% of our business, it's very, very high margin and can range from anything from 25% to 80%. So 25% on a straight distribution, no risk distribution commission through to 80% on a format sale or back catalogue. And it's really important to have a number of big shows within your portfolio around which you can build meaningful monetization opportunities. Now because we have a scaled international production and distribution business, we can maximize the value we make we can get from our the IP we create, and I'll explain with some examples how in a moment. But first, I just want to touch on risk and how we manage risk within our business model. If you look at the split of our business in terms of genre, genre split, 80% is unscripted. So that includes entertainment, factuals, fact dent. It includes the soaps in this definition, our daytime shows. And 20% is one hour scripted drama. And the distinction from a risk perspective is important because they both differ in terms of financing and the risk profile across those different genres. So unscripted, which is 80% of our business is easy. We don't take any financial risk. When a broadcaster commissions a scripted show, they fully pay for the show, including the built in production fee for the producer. Development cycles in unscripted tend to be shorter, so it's quite possible to create a show in a given year, sell it, produce it and have it on air within the year. In scripted, the development cycle is longer. So again, it's not unusual to have it take to take two to three years for a show's original kind of idea through to a script being commissioned, through to it being sold to a network, through to it being cast, produced and ultimately transmitted on air. But it's important, I think, just maybe to understand, well, that's a long time. Actually, financial risk that we're taking in that period is pretty small in the context of a studio of our size. It's mainly people's time and possibly some scripts, but nothing material in that period. Where we really take risk in scripted is in deficit financing, and this is increasingly so. And the reason for this is that very often now scripted content the cost of scripted content is not fully covered by the commissioning broadcaster. And so that gap, the difference between what the commissioning broadcaster can pay and what the cost of production is, the deficit finance needs to be filled before we can actually go into production and greenlight the show. And this is where our distribution business actually, meant to be on there. No. And this is where our distribution business at GE, Maria will talk a little bit more about this later, comes into play. They are the ones who will decide whether they want to invest in that deficit finance. And of course, they'll only do that if they believe that the sales potential from international sales is going to far exceed the deficit required to fund the show. Given the investment required in scripted, we also have a very, very clear green light process whereby any scripted deficit in excess of GBP 1,000,000 requires Studios board sign off. And as Julia and I sit on the board and Caroline and Neen sit on the board, we have full visibility, therefore, around the risk that we're taking as a group in scripted. And in assessing each project, we'll do a full three sixty evaluation of the value of that show to ITV and pay particular attention to the confidence of the sales team's estimates in international sales on their different performance scenarios. And this is something we do. Over the last four years, on average, we've deficit funded between twenty and twenty five series scripted dramas a year. And there are a number of sales strategies once a show is greenlit that GE can use to manage the kind of risk reward profile of those deficit financing. And I will explain how to do that in a moment. But before I do that, I'd just like to spend a little bit of time on really being clear about the actual risk we were taking in terms of the overall cost of a show. So I'll do that by way of two very simple examples. The first is a UK show, UK drama costing £1,500,000 an hour. Local broadcaster can pay GBP 800,000 of that cost. We get tax credits of GBP 300,000. So that leaves a gap of GBP 400,000 per hour to be filled before that show can be made. And so that is normally the deficit finance that GE will have to make a decision about whether it wants to invest in or not. So when we're producing a show, we're never committed as a studio to the full £1,500,000 We would never go into production on a scripted show without an order from a broadcaster. We'd never go into production on a show without having a clear view about how we're to fill the deficit funding. Second is a U. S. Example, very similar principles, just bigger numbers. So here, it costs $5,000,000 an hour to produce the show. U. S. Broadcasters tend to pay a bigger proportion of the overall cost. So in this case, 60% or $3,000,000 an hour. There are tax credits also available in The U. S, so we end up at about $1,000,000 an hour as the funding requirement. Just to Julian talked about our U. S. Scripted business. We very much have a kind of sweet spot in terms of where we're targeting our investment. And we try and keep our deficits within stick to projects where the deficit is between $1,000,000 and 1,000,000 point dollars an hour within U. S. Scripted. As I mentioned earlier, there are a number of ways of sales strategies for GE to sell the show both before, during or after the show has aired. Firstly, you can try and find a co production partner. This is increasingly used where the deficits are big on bigger international shows. And so that co production partner can either be another international broadcaster or in a new world, an OTT. And a good example of how this works is a show, Victoria, which is a co pro between ITV One and PBS in America. PBS came in on that show on the back of some scripts, so before the show was made. And for them, are two big advantages in doing that. One, it gave them certainty that they would get the show for the market. They love the creative ideas. So coming in early guaranteed them the rights for The U. S. Market. And secondly, it gives them creative input into the production as the production is evolving. And of course, for us, what it does is it means we've recouped a big part of our deficit before we go into production. And that can often give you much more confidence then to go out and sell into other territories or to hold back and wait until after the show has aired and then sell on the back of a very successful show in the local market. But the flip is, if it doesn't perform as well and you've held back sales, your sales leverage is obviously not helped. So in the end, it's a risk reward trade off on each individual show, which we're very, very used to taking. As I say, we do this 20 to 25 times a year. And our success rate is pretty good. This is a portfolio play. Scripted is not a guaranteed success, not everything works. But looking back at our average success rate over the last four years, four out of five of our investments have made money, which is not a bad return from a portfolio point of view. And we're very experienced in the area of co production. So I mentioned Victoria co pro between ITV and PBS. We also have Vanity Fair as a co pro between ITV and Amazon in The U. S. Snowpiercer, Co Pro between TNT and Netflix and international. So this is a world we play in more and more regularly. So just to finish, I just want to give two very simple examples of how our operating model, our business model, enables us to make more money from our IP than just being a UK producer alone. And the first example is a UK drama. It's a little bit more expensive than the previous example, so GBP 1,800,000.0 an hour. The funding structure is GBP $8.30 paid by the commissioning broadcaster. There's GBP $370,000 of tax credits, leaving a GBP 600,000 an hour deficit requirement to be filled. Now in this example, GE take on the deficit risk and do very well. We sell the show for net international sales of GBP 1,200,000.0 an hour, making GBP 600,000 an hour profit. So across a single series of a show with this kind of success, across the life of that series, as sales come in, we would expect to make £6,100,000 of profit, 1,300,000.0 from for the production company for its fees and then £4,800,000 internationally as a result of having a successful show. Now if we were just a UK producer without the capability of investing in the show as a studio or without having the distribution reach to distribute that show, we would expect to make about half that amount. We'd still make the GBP 1,300,000.0 as the production company, but we'd only get a slice of the international sales. We'd probably get about a third of that international sales. So I guess just a very simple example of how having scale, having all the different parts presence, all the different parts of the value chain means you can drive more value from your content. The second example is an unscripted show. This is a series that costs GBP 13,000,000 per series to produce. It includes a 15% inbuilt production fee for The UK label. It's an unscripted show, there's no deficit funding required here. It's very straightforward. The show is sold as a format internationally by GE, and it's produced by ITV in two territories. And UK finished tape sale of this show is sold in 12 territories. And again, across the kind of full value chain of a show like this, we would expect to make GBP 7,000,000 per series. And most of that money is made actually outside of The UK. So you can see the kind of production margin is GBP 1,700,000.0, producing in two other countries yields another £3,100,000 and then GE tape sales and format sales, 2,100,000.0. And again, if we were just The UK producer in this example, we'd still make a UK production fee. We'd get a share of international, but that would really just be the 5% to 7% format fee rather than full production margin and format fee. And then in GE, we'd get a share as the IPO and we'd get a share of the international tape sales and international format sales. But we would not be capturing the full value of the IP that we have created. So I appreciate there's a lot to probably be taken in there, but that's my time is up. So I'm now going to hand over to David George, who is the CEO of ITV America. Thank you very much. David, this is the American portion of the presentation, so expect it to go long. I'm kidding. I'm kidding. I'm kidding. I'm here today to really highlight three things for everybody. The first is ITV's place in The U. S. Market. The second are the key opportunities that we have there. And lastly, the priorities for the future. Now again, The U. S. Content market is the largest in the world with 119,000,000 TV households. The original content spend is roughly four times the size of The UK market. So again, that's why I'm going long. And with OTTs like Netflix and Amazon coming on, the content spend is only going to increase. And ultimately, we think that competition is great for us in the production business. So let's go to our story so far. Who doesn't like a good history lesson? So ITV began in America by coming in and strictly selling formats. We were not the hands on producer of the content. And largely through acquisitions through the years, as you can see in the timeline, we were able to acquire production companies that really were the hands on producers and allowed us to take that revenue into our systems. And what that did was it created an unprecedented scale in the marketplace. And as you can see, in January 2016, we had our first wave of integration. That was when Leftfield Entertainment and ITV Entertainment merged, and we basically combined real estate, back of house infrastructure, those types of things. And right now, we are in the middle of the second wave of consolidation with High Noon and Think Factory completing their earn outs, and that will give all six core U. S. Labels will now be fully owned come 2019. And what that does is it makes us the largest unscripted group in The US with over six hundred hours produced. So moving on to the good stuff. This is we're bringing sexy back right here, okay? So let's talk about the shows a little bit and our customer base. I mean, I think the great thing about us in The U. S. Is we have great program scale and diversity, and that is key in an evolving market. And we are in business with just about every network and platform. And I think there's two key things you have to have as a producer, and that is established hits and the ability to launch new IP. So let's talk about the established hits first. We've got a strong catalog of returning series. We are over 500 episodes into Pawn Stars, First 48, Alone, County Cars, Marriage Boot Camp, all have been recommissioned for next year. The Big Kahuna, I like to call it, Hell's Kitchen, Season eighteen is premiering this fall, and the ratings remain really strong as the highest rated unscripted program in broadcast on Friday nights. And we are currently discussing a new order for 2019. And it's important to note that we did not deliver any Hell's Kitchen this year because we delivered two cycles the previous year. So on to the new hits. This is a key thing for us. We launched the highest rated premiere in unscripted in three years this year on Fox with The Four. Thank you, P Diddy. And we are currently in negotiations on season three. And the other big one that we are about to go into is the launch of Love Island on CBS. We're very, very excited about it. And I think the interesting thing about this one is that there was competition in the marketplace for Love Island on broadcast, cable and SVOD. So the content could have lived on any of those platforms. And the benefits of owning Love Island are not just margin, but we participate in ancillary and integration revenue. So again, that shows the power of why IP ownership is critical to our business. And really, selling to CBS has a halo effect on Love Island globally, and Maria will give you a little bit more on that later. One more show I love to highlight. Queer Eye is returning for seasons three and four. We're in production right now. Last week, we won three Emmys. I was there too, so had that going for me. It's nice to win. But you know what? The the amazing thing with the Emmy wins isn't just about winning. It's also the fact that these were the first unscripted Emmys that Netflix had won. So that's critical for us to be breaking new ground in these SVODs and winning them the awards first. One other big note. In 2016, we had two projects in development with OTTs. This year, we have 14 in production or development. So you can see that our business is continuing to grow. But the key factor here is we are strong in broadcast, cable and SVOD. Let's move along. Okay. Market opportunities. The U. S. Market is kind of flooded with opportunities right now. A lot of people are getting into the unscripted business. But we can't lose sight of the linear importance to the business model. And I say that because ultimately, linear is still the one place that is providing big volume for us. We haven't found that yet in the OTT world. And the key fact here is known IP is at an all time high as trusted content is cutting through a cluttered market. And that gives ITV's library of formats and original IP a huge market advantage. And a good example of this is for weddings, which had been on the shelf for a few years, and we are now reactivating for TLC. Going back to the volume point, the cable market is still providing the volume. And a good example of that is we delivered 40 episodes of Forged in Fire last year. We've got 20 more coming this year. We've got 30 episodes of First 48, and there's still hits being broken on cable like Live PD or Fixer Upper. And so we're very, very excited about the volume play that's still coming through there. Of course, Unscripted is doing well on OTT. We're excited to be breaking there, too. But we've got a lot of new buyers coming into the marketplace, too, again, creating big competition, Katzenberg's new TV. We're hopeful Mr. Eiger wants to throw his hat into the ring, too. He seems to have a big appetite these days. So up next, key priorities. So this is really about what we're focusing on in 2019 and what we're going to be doing in the marketplace. So targeted development. As the cable market shifts and their brands become more and more defined, we are focusing our six core labels, as you can see on the bottom, on what they do best. So they are all focused on specific genres. So ITV Entertainment will be doing big game, big format, high noon lifestyle, left field pictures, male programming, sirens female, good k for crime. And really those six core labels represent one stop shopping for OTT players as well who are hunting at every single genre. And that is very unique to ITV America. That is something nobody else can say they have. We are focused on OTTs. As you can see, increased focus on the SVOD market and broadcast. We're in business with two of the four broadcasters with projects in development, NBC and ABC. We've got new series coming to Netflix and Facebook. And then last up, operational efficiency. As we fully acquire these companies, it gives us the ability to find efficiency. So we're looking at things like back of house and consolidating real estate to give us a little bit more of a market advantage. And a good example is we merged our Silver Spring office with our New York office this year. And lastly, this year, we're doing something very unique. We're launching a Connecticut tax plan initiative. We are the first company to be taking advantage of a 30% tax credit in Stamford, Connecticut. We're set to have 11 series flowing through there this year. And we're really doing this for two reasons. It's the only tax credit state in America that's close to a metropolitan media hub, which means we have access to the workforce. The second is it helps us take advantage of our scale, and it creates a competitive advantage for us when networks are ordering content. So that concludes my U. S. Presentation. I hope I didn't bore you to death, But Never. Never. Okay. I will introduce Maria, who's the President of Everyone knows United two shoes. You get bangs in the day? Day? You bangs in the Last. Take your time. All right. So I'm going to I'd like to expand on what you've heard already from Julian and David about our international production operations. We in all the major territories. I won't list them for time in the interest of time, won't list them. But again, to reiterate something Julian said, we're there for two reasons. They're either creative hubs like Netherlands and Nordics or they are strong, big, valuable territories like Germany and France in their own right. Across our international group, we have a lovely nice mix of shows that they are producing based on formats, which they are importing in, which is good because it means we're utilizing our scale and leveraging our overall business. But also, they're coming up with original ideas. Last year, was roughly about sixty-forty across the whole of the international group. If you rewound the clock four years ago, again, I'm reiterating stuff you already heard, but the international group, it's a smaller time scale. I'd say three to four years ago, we were a completely different group of people. It's a it was largely a factual business. We were not big producers in our territories, and that is completely and utterly transformed in the last few years. We have rejuvenated those companies. We brought in new management. We brought in new production teams. And we've really, really tried to focus people on those two value drivers, entertainment and driver and drama, sorry. And it's had a substantial impact. Our revenue in those in that division, in the international division, has grown by over 80% between 2015 and 2017 alone. That's just two years. And a huge, huge step in that transformation was the acquisition of Talpa because it brought something that is really special and it's really still quite unique and rare. I wouldn't say unique, rare in our industry, and that is a truly global hit in The Voice. The show has now been made in over 65 different versions. That's an astonishing number. And it's continuing to perform strongly, and it also provides for a multitude of different ancillary exploitation opportunities from apps to cruise ships, believe it or not, to sponsorship. The show has been a huge boost as well to our efforts to attract talent. It was really important to us to bring the rest people in. And a show like The Voice is very, very attractive. So I'm going give you an example just to bring this to life. In France, The Voice is number one franchise on air and advised that position with Banerjee's show Survivor. When we bought Talpa, we moved the production rights over to us away from a third party, but we needed a team. We couldn't convince TF1 to trust us unless we had the right people producing the show. And it struck us that the right people were the people who'd made Survivor such a hit all those years. So Frank Fermingillon joined us after having run Bannerjee's Alpa Labour for about ten years, and he built a team around him. And that is paying off dividends, created a virtuous circle for us. And that is something we've replicated over and over again. That virtuous circle is you've a great show brings in great talent. That great talent wins new commission. And the most recent launch we've announced in France is that I'm a Celebrity is coming back to screens next year. And as well as bringing in new teams, we have also very selectively bought a few companies. Now those companies have been focused on the drama genre, where lead times are longer and the expertise is specialized. Last year, we announced three acquisitions. In February, we announced Tetra, which is a leading French drama business. In October, we announced Italy's Cat Lea. And at the end in December, we announced a start up built around a lady called Pew Berns, who is one of the most respected and well known of the Scandinavian executive producers, and she's based in Denmark. And as you already heard, drama is a key driving genre for us. We expect it to be a bigger part of our revenue and our portfolio going forward as a production company. But why European drama when it's the English language that really has dominated this industry for all these years? And we had two reasons for it. One was the European shows are performing better in their own markets. And secondly, European shows, non English language shows, traveling more widely to a more welcoming audience than ever before. I mean there's a lot of evidence to support what used to dominate a lot of European broadcast schedules, I. E. U. S. Scripted shows, U. S. Network procedurals are not delivering to their broadcasters as much as they used to. Again, just take the example of France. 2011, of the top 15 shows, 50% of them were U. S. Scripted shows, and they were dominating the upper reaches of that 15. Last year, there was one U. S. Show and the rest of them were French shows. So it is the local production that is filling the gap left by The U. S. Network shows. And then my second point about widely traveling widely. So one of the impacts of Netflix is that they are providing for all of us a more diverse range of shows to watch. And Netflix have demonstrated their understanding of the need for diversity and local relevance because they have committed a certain amount of money. They've committed to I think they've publicly stated that $2,000,000,000 will be spent on European shows as well as saying that half of their originals will be produced outside of The U. S. In the coming years. Now that's provided a home for our show, Saburo, the man with the gun that Julian showed you right up front, which was their first ever Italian commission. But it's also done something else, which is it stimulated competition. A lot of the European platforms are responding because they are also upping the investment in original drama across the whole of the continent. So we're really, really confident right now that the renaissance we're seeing in European drama isn't static. It's actually going to increase, and we're in a good place. The next big show for us that I just want to put on your cards so you keep an eye out on it is zero, and it's a big epic multi territory, multi language show from the same creative team behind Gomorrah produced by CALEA and funded through a consortium of buyers, including Amazon, Canal plus and Sky. So to summarize, the international productions, Because of shows like zero point zero coming up, because the strength of The Voice just continues to sort of increase, because we have rejuvenated teams, because the demand for local content is increasing And lastly, because of the rollout of a hit show like Love Island, we feel we're very, very, very well placed for further growth. So turning to GE. You've sort of gotten the message, I think, between Julian and David that creativity is a local activity, but exploitation really has to be a global one. And this is what G does. It steps in, and it's our international global exploitation arm. G takes the shows produced by the 50 plus labels, and it sells those shows outside of the territory, outside the primary window within the territory. As DVDs, although that is a much smaller bit of our business now than it was ten years ago, and as in the case of the animated series of toys and other consumables. And again, just reiterating some of the things you've already heard, with Love Island's success in The UK and the impact it's had on the commercial team, we are also very confident that we can translate that into increased licensing revenue for Love Island in the future. Now G has a broad and diverse portfolio of content. And even though it sells some third party content, most of what we sell are our own shows. And that ownership is a really, really key point because we create and keep the value that attaches to creation. We produce, we keep the production margin, we distribute, and we keep the commission that attaches to distribution. And that is a differentiator. Not all of our competitors are in the same position as us. We're not over reliant on only one client. Even though the opportunities afforded by the digital platforms doesn't mean that Netflix this year will be our biggest client for the first time ever. Still, the top 10 are no more than onethree of our revenue, which we feel makes us very resilient. Unlike the production businesses, GE is skewed towards scripted. Most of our revenue comes from scripted rather than unscripted. And it's been fueled the growth in the last years have been fueled by shows like Victoria, by Poldark, by Goodwitch, all of which is sold in over 100 territories. Coming up soon, and why we again we feel we're in a very good position, Snowpiercer, Bodyguard, Vanity Ship Fair, a lot of the shows you've heard about already. And in the future, these will be supplemented by the European developments that I mentioned. G's role has changed. David explained how deficit funding works, where GE comes in. What that means as a sort of in terms of behavior is that GE has to be a partner to producers. It's no longer the sort of old fashioned distributor waiting for shows to sort of come out of a pipeline. It is very important that GE is very early on in the creative process finding funding opportunities from third parties, whether it's co productions or whether it's presales, etcetera. And also, where we are talking about IT shows, it connects with our own network to make sure that decision making is done on a full three sixty information basis, especially important as the ambitions of our dramas have increased. So moving on. Because GE needs to interact with all the production labels, we use the team as the connecting tissue for collaboration within the studio group. That collaboration takes the form of regular creative exchanges between we put the scripted guys together, we put the unscripted guys together, we encourage them to co develop ideas from scratch, we encourage them to occasionally co fund with each other, We encourage them to leverage their access to talent. And a good example of this is five Gold Rings, which was a bottom up co development between Talpur and Possessed and has already rolled out into eight territories. And it also this connecting tissue also allows us to share best practice. It allows us to send in flying producers when we have a new show launching. It allows us to work through common challenges. And one last thing that GE does is it brings back intel into the business because the sales team are regularly interacting with 100 plus buyers. They're quite good at spotting themes. They tend to be the first place that says, You know what? Let's move slightly over there. And I think that is also really important to have within a connected business is that you do have the bits of the business sharing information, sharing knowledge. Finally, something we should never forget is to talk about our heritage because it's something we should be very, very proud of. Shows like Prime Suspect, Morse, Cracker, those are the shows that define the British crime genre, and they're all our shows, they're ITV shows. And they're ITV shows that give us enduring returns. We continue to sell our catalog year after year after year. And not only that, it also gives us the opportunity for remakes. Super important because it's the remakes that gave us Thunderbirds, Dancing on Ice and really, really importantly, Love Island. Back to you. Thanks, Maria. So in conclusion this won't take longer, doesn't it? Hour? No. Two very two brief slides for you, you'll be glad to hear. First of all, key priorities going forward. I'm not going to go into a lot of detail on these. These essentially build off what you've heard over the last forty five minutes or so. Number one, to continue to build the creative strength of the group. That is a never ending task to retain and attract great talent. Second, you've heard a lot about the integrated producer broadcaster relationship. We want to push that collaboration even further. A good example of that would be the joint funding of some entertainment pilots by Kevin and I in the search for new entertainment shows. Third, you've heard a lot about the international scripted business. That's a very big priority for us. We feel that we're in a very exciting moment. We want to build on that with further investments in our drama development. And fourth, we want to build our capabilities to monetize our IP to the max. We've seen how successful that can be with shows like The Voice and Love Island, and we want to build our capabilities further in that space. And as you'll know from the half year, to help and support these priorities, we're planning to invest an additional £10,000,000 phased over three years. Last slide. Is that a cheer I heard? Take the head. Yes. To up some. Okay. So I hope you've got a sense of how positive and confident we feel about the future. You can see from the half year there some of the commitments and targets that we've talked about. That confidence flows from two big things: one, that we operate in a strong and attractive market and secondly, that we feel we have a real competitive advantage as a group, partly because we're part of an integrated producer broadcaster, partly because we're a scaled international player. But of course, to end where we began, it's also because at the end of the day, the foundation stone of this business is great talent and great shows. And on that note, you. We are Right, quick time for questions. So I'll go to Julian, Laurie and then over there. Julian, Rock? Thanks, Emma. Thank you. First question is, as you said many, many times, it was all about talents. Do you think it would be possible to merge ITV Studio with a business of similar size? Or because it's all about talent and some could leave, one plus one would be equal, 1.5 as opposed to 2.1. So from a talent standpoint, do big merger in content make sense? That's my first question. And then the second one, on the split you gave between free to air and pay and other in terms of revenue, how do you define pay and other, a mix model like a CBS, which is both advertising and pay? Did you put that in pay and other or in free to air? Or I guess the question is how much of your revenue is pure SVOD, Amazon, Apple, Netflix within that split? Those are my two questions. Thank you. Okay. I'll answer very generically about the effect of the question is, does scale do anything Yes. Look, let me obviously, not going to comment on any speculation. So two things I'd say. First of all, I hope it's come across in this presentation. We're very comfortable with the scale that we have. Well, I hope it's come through, benefits and dividends of our scale. And look, our approach to any M and A remains unchanged. We always look at the creative talent. We always look at the creative business. We look at whether it's a strategic and cultural fit, whether it's value creating, whether you can get acquired at the right price. So we've been very disciplined about that in the past. We continue to be very disciplined about that going forward. The second one was about the split between FTA, Yes, Another and it's relatively pure. So specifically, you mentioned CBS. That will be included in the free to air. We're not breaking out the FANG's as a specific number. We see it as a growing part of our business. So I think Dave George mentioned we've got 14 shows in either production or development with the FANG's. And we've mentioned some of the co pro partnerships in terms of scripted. So we feel very confident about that being a growing part of our business. So that's included within the kind of pay and other. Okay. Laurie? Thank you. So it's just Laurie here from Deutsche again. The 12% ROI you quoted, does that include all the earn outs and what you currently include in the exceptional charges? Second question is just over the 7% organic. Does this include the consolidation of acquisitions after two years? Because it was quite a it was a multiyear duration you presented. Yes. And also, if we stripped out growth in internal commissions, what would the actual external organic be? Have you been writing those down, Karen? Yes, I have. First thing is 12%, is it excluding earn outs? Let start on the middle one, I think, percent organic. That strips out that is based on excluding all revenue from all acquisitions made from 2011. So it's not the definition of organic we give an error. And it's normally when we talk about organic being anything we've owned more than twelve months. So it's a much purer view of organic in terms of it's excluding everything from 2011 that was acquired since that point in time. And then there was a question about external organic. External organic, I mean, our share of I mean, don't look at them as we have to win the business whether it's internal or external. So we don't look at it in the sense of internal business is easier to win than external business. So I think that's just an important point to make upfront. I'm looking at Kevin as I say that, which so the percentage of our NPV over that period, I didn't talk about it in the presentation, we've grown from about 55% of the network spend to 66% of the network spend over the 2011 to 2017 time period. And that's been a very deliberate part of our strategy is to try and maximize the benefit of being part of an IPB. If you strip out and this is broadly directional, so I'm not going to get to the percentage. Organic growth will be probably excluding internal, the external organic growth will be between 4.55%. Okay. And the ROI, does it include or exclude earn Did you answer? It is again, it's based on grossing up the original consideration because so it's not based on an extrapolation of what we think the earn out would be. It's based grossing up the original consideration up to 100%. So it does include It does include it, but not based on a projection basis, based on a pure just gross of so if we acquired something 70% for GBP 100,000,000, we just gross it up. With the earn outs that are associated with that? Because obviously, you've got quite large I'm thinking here specifically about Talpa, but I imagine there's more in there where you've It wouldn't include earn It would include gross up of put coal of a where we have a partial acquisition. It would include the gross up to 100%, but I don't believe it includes the earn outs. Do you have any sense of what that would be if you include the earn outs? Not off top my head. We'll come back to Laurie. There was a question just next door to Laurie there. Sorry, I beg your pardon, I can see you. It's Lisa Yang from Goldman. A few questions. First one, you mentioned Netflix and Amazon spending £11,000,000,000 and clearly looks like a big number. But to put it in context, do have any number in terms of how much the footwear and pay broadcasters are spending on content overall globally to have a sense of the TAM? The second question is, if you look at across your portfolio, where do you feel you need to gain more scale in terms of whether it's churn or market? And how do you think about the mix between organic versus external investments? And the last one is really about like could you maybe help us understand what's the supply versus demand dynamics? It looks like a lot of people are trying to invest in original content. So at what point could we see a sort of oversupply of content in the market? I'll take the second one. I mean, essentially going to repeat what I said earlier, which is we're very comfortable with the scale that we have. And again, I hope that really came through in the presentation. We've got some very clear criteria, something of course we always evaluate, but we're very comfortable with the scale and the markets we're in. I missed the third question. There was organic versus acquisition and there was supply versus demand dynamics, which I guess you should take. Yes. Well, organic versus acquisition, the targets we have set out are organic targets. They're not including acquisitions. So the 5% CAGR is an organic target, not including acquisitions. There's a question over there and there, Jill. Thank you. It's Adrian again from Merrill Lynch. First of all, if you look at the if you read the last annual report from Animal Shine, they mentioned that there was pricing pressure coming from broadcasters internalizing content production instead of externalizing to content producers like Fremantle or ITV Studios. Is that also something you're witnessing at ITV Studios, first of all? And second of all, should we consider Netflix and Amazon fully as partners? Or can they be sometimes enemies because they might commission content themselves rather than relying on people like ATV Studios? Julian, take Yes. Both, I On pricing pressures, I mean, I'd be very careful about the big generalizations around that. It really, in the end, one of the great things about our business is that if you have the right idea, it all depends on the idea and the market. So I'm personally very, very cautious about big general statements like that. The point about Netflix, I mean, look, if you're sitting in this seat here, the world of SVODs, the new buyers, you see that through the prism of opportunity. And remember, when we're working with, say, Netflix, we're working with them in a multitude of different ways, from U. S. Unscripted to tape sales to co productions to original to originals. So we have a whole mix of relationships. And from our point of view, it's opportunity. Another question there? Thank you. Thanks. It's Asim from Liberum. Three questions, please. First of all, just in terms of short form of content premium short form of content, that's been mentioned by quite few people as potential area of opportunity. Just wondered sort of how you're actually set up for that at the moment, whether you have the capabilities. The second thing, when you look at the international opportunities, one of the markets that wasn't talked about sort of was China. Obviously, had a bit of a mixed issue there with the voice there. But obviously, given the growth that you've got in the services, sort of some aspects may be considered to be quite attractive markets. So sort of any views there? The third thing is just sort of coming back in terms of the FANGs in terms of, obviously, sort of a big opportunity in terms of growth. You look at Netflix and you look at Facebook, they definitely had stumbles over the next sort of over the past sort of six months and so forth. If, for example, you start seeing them having further stumbles and that puts pressure in terms of their business moving forwards and the amount that they can actually spend on content, sort of how much do you think that sort of impacts your business? So are you still quite confident of the growth rates? Or do you think potentially that could be a major spanner in the works? I'm feeling good. Third, and then Maria can take China. Short form, well, you know, we've we're one of the investor partners in UTV. And I think actually, it's become a very, very interesting area, short form. And actually, if you talk to Geoffrey Katzenberg, he will tell you that actually the short form content that he thinks is going to become most in demand is actually sourced from essentially the people who make long form content. The way he describes it, and it was a penny drop moment for me, was he said, think us reading a 400 page thriller before The Da Vinci Code, where you had 10 chapters. What I'm after is still the same story of 400 pages, but it's in 50 chapters. And so actually, what I think you'll find is the same skills and expertise for long form. Certainly for a player like UTV, they're going to be pretty similar. The point about the FANG's, I mean, it's very hard to comment on a hypothetical around what would happen with their spend. What I would say is that, again, I hope that's come through today, is that we work with them in a multitude of different ways. And also, they do form just one part of our business. We have a multitude of different partners. I mean the truth is most of our drama, when we deficit finance drama, most of it isn't with global co productions, with the SVODs. So it's a relatively, you know, in the grand scheme of things, a relatively small, though growing part of the business. China? China. So just just remind me, what was the question about China? You were like, why not in China? Why not in China? Okay. Well, the simple answer is regulation because it's it's it's the most regulated market that I can think of. I've been backwards and forwards to China a number of times because it is a very large, potentially very valuable place to to operate in, but it is not of an open market. What they value at the moment, what our Chinese partners, we do have Chinese partners, value at the moment is an opportunity to work with us to co develop. They want to understand how they can originate shows out of China with a partner, which will then help them become a creative hub in their own right. And that at the moment is where we are focused. That's it's show by show, case by case, partner by partner, how do we help them achieve what they want to achieve and make that a successful business for ourselves. It's not a country you can just batter the barriers down on. Thank you. There was a question right at the back there. It's Jozanna Solati from Macquarie. A very straight question this time. The Bodyguard, what happened? The most exciting I'm not giving the last. No, After spoilers. But it's on BBC. Why why not on ITV? What what happened? Is that tell us about the entire Ronnie, how did I go ask that? Just a few weeks back. Okay. So there's a specific and a general answer to that. So the specific one is, you know, ideas are not developed in a vacuum. They they come out of discussions and relationships. And the Bodyguard came out of Jed Macurio, brilliant creator and writer. Obviously not a fan of Bodyguard, brilliant creator and writer. Oh, they're all leaving. Who who was behind Line of Duty on the BBC. And he had, as a result of that, a great relationship with the BBC. And what came out of that was Bodyguard that was developed specifically for the BBC. So that's the specific answer to it. There's a more general one that I would make, which is we wouldn't be able to grow our drama business very much. It would naturally cap out if we only worked for the network. So we want to work with Sky and Channel four and the BBC and so on. And, of course, no one knows where where the next hit's gonna come from. So we're delighted and very proud that it's on the BBC, and we think that's a win win, frankly, for for ITV. Yes. And just a second question, 63% of your content goes to free to air and the remainder to pay and other. Do you think you do you want to increase free to air or others or pay another in terms of share? I I don't I mean, honestly, at the at the at the the label level, it doesn't quite work that way. You know, I don't think we see honestly, we don't we don't see sort of HQ saying we'd like to tilt one way or another. What we really want is we want to take advantage of all the opportunities. So I and I think we're looking at a broader a broader approach to diversify rather than necessarily double down in one area or another. If you were to sell 100% of free to air, there would be little diversification because the I would answer concession that and say that we manage the risks of all the different customers that we have, and we balance that by having a diversified view of the customer segments. So we are we do, do that at both group level and at the Studios board on a regular basis so that we don't skew too much one to the other because you both ask questions. One is what happens to the fans if they stumble, the other is free to air. So it's just the balance between that it's a portfolio business. It's business, And we say this when we come and see shareholders one to one. We always, always talk about studios as a portfolio business, and that's how you have to see it because it is about how you diversify in that portfolio and the success. And sometimes, there's a lot in development. You won't get a success every time. So it is genuinely a portfolio. It's like all your portfolios. So I think that Now if there's no more are there any more burning questions for the studios team? No? Oh, burning questions. You've got high expectations It's of this Richard again from UBS. If you looked at sort of like the platform players, clearly, were obviously adding more and more genres to their repertoire. Originally, it used to be much more about scripted. Yes. And so as you, as the biggest producer of non scripted, how do you actually try and fill those increasing demands for genres? Unscripted is the opportunity for OTTs, basically. Mean, Dave, maybe talk about that through the Prisma of The U. S. Yes. I think one of the things I touched on in my presentation was development focus and becoming that one stop shop. And ultimately, when we started learning that the you know, these OTT players were, you know, broadening what they were going after, we kind of came to the realization that we were in a unique position of having these best in class producers in all these different genres. So we felt like we were kind of primed to take advantage of the OTT hunger for a bigger base of content. So I think we just took advantage of something that kind of I don't think when the acquisitions happened, it was set out to be that way, but it just kind of ended up happening, if that makes sense. Okay. Any other questions? If not, I'm going to thank the studios team very much. Thank you very much. You're welcome. I'm going to cross over with you and just conclude. So it brings us to the end of all our presentations. There was a lot of information there. I hope you found that really, really helpful. You have seen how enthusiastic and passionate the team is about what we're doing. They're very clear about what we need to achieve and actually, most importantly, how we're going to achieve it. This opportunity really to succeed is underpinned by key strategic advantages. I really hope we've conveyed those strategic advantages because they are really very important to the next three to five years. We've got creativity. You've heard about from Kevin all about that. You've heard from Julian about that, our ability to monetize. Kelly has talked about that. Maria has talked about that. So everywhere we look, we are constantly looking for the commercial opportunities. And then, of course, through the new area that we're creating, which is direct to consumer, and that's Julian and Rima, who's sitting over here, who's going to be launching the SVOD service in 2019. The IPB is a significant commercial and strategic advantage. I hope that's come across. It's really hard to explain the IPB in short meetings or at results presentations, and that's why we spent a bit of time doing that with you today. And underpinning all of this, we have this amazing fan base, these great customers. They've been viewers, but they are becoming customers. And we really, really believe that we can engage with them much, much more going forward. Now underpinning all of this, of course, is the strong balance sheet. We'll be very, very disciplined in the way we allocate capital. I know you'll be very pleased to hear that. And finally, we have got fantastic people. You've seen some of the strength and depth of our talent, some new, a lot of very established people, very experienced management team. And we're adding to that experienced management team with some key appointments. Corine, our CDO, you've heard about. Remo, you've heard about. We've also got you've heard Mark, delighted that he's on the Management Board. We've also got recruited very recently someone called Dan Colton, who's our Strategy Implementation Director. And I'm saying this to you because I know really, really well how hard it is to execute strategy. So it's great to have a great strategy, and I think we have got a really good strategy. But actually now, it's all about the execution. It's all about implementation. And he will hold our feet to fire. He's ex BCG. He's done this 150 times for hundreds and hundreds of clients, and he will hold our feet to the fire to make sure that in every bit of the businesses that you've heard about today, we are delivering. We are confident. I, with all of the management team, are very confident that we can do that. On that note, I'd like to thank you for listening to us. And there are drinks, you'll be pleased to know, in the green room. It's not only next door because they're filming Jonathan Ross, so we don't want to bump into him. So drinks in the green room. Jack will ably show us the way. Thank you very much, ladies and Thank you

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