One ITV. ITV plc Annual report 04

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1 One ITV ITV plc Annual report 04

2 Financial highlights (pro forma basis) Turnover +3% to 2,083m (2003: 2,025m) Operating profit* +49% to 325m (2003: 218m) Profit before tax* +57% to 340m (2003: 217m) Operating cash flow (published basis) 321m Earnings per share (published basis) 3.5p (15 months to December 2003: (0.3)p) *before exceptional items and amortisation Contents 02 Chairman s statement 03 Chief Executive s review 06 Our main programme genres Drama Soaps Entertainment News and current affairs 14 Operating review 22 Financial review 27 Corporate Responsibility 28 Board of Directors 30 Directors report 33 ITV pro forma trading financial information 34 Statement of directors responsibilities 34 Independent auditor s report to the members of ITV plc 35 Consolidated profit and loss account 36 Consolidated balance sheet 37 Consolidated cash flow statement 38 Reconciliation of net cash flow to movement in net debt 38 Consolidated statement of total recognised gains and losses 39 Company balance sheet 40 Notes to the accounts 63 Corporate governance 67 Remuneration report 74 Shareholder information 76 Five year financial record Cover Image: Ant and Dec

3 Throughout its 50 year history, ITV has provided viewers with the very best television can offer. Engaging, popular, accessible, challenging and innovative programming across all genres that people want to watch. The past year has shown that One ITV can deliver better programmes, strong competition and financial growth. We are confident that our ability to deliver popular programming through the ITV family of channels and other media will ensure ITV s continued commercial and creative success at the heart of UK broadcasting. 01 Something to celebrate On 22 September, ITV will be celebrating 50 years of outstanding programming, with a raft of original, specially commissioned shows and a series of memorable events. with...

4 02 ITV plc Annual report 04 Chairman s statement The past year has been an historic and busy one for ITV. In January the shareholders of Carlton and Granada approved the merger of their two companies to create ITV plc; and since then the senior team has been shaping and developing the business for the future. Charles Allen, in his Chief Executive s review, gives more detail on that activity, and I focus on some of the major achievements and strategic initiatives in which we are involved Results The combination of rising turnover and rapidly reducing costs following the merger has contributed to sharply increased profits. Your Board is proposing a final dividend of 1.3 pence per share. This reflects the improving profits and strong cash flow and results in a full year dividend of 2.4 pence per ordinary share, an increase of 20% on the dividend paid by Granada plc for the equivalent 12 month period last year. Business development We are concentrating on two areas in developing ITV: First to improve our current business This has been very much the focus for Our actions have been based on achieving a number of the goals that we identified in our report at the beginning of These included increasing efficiency, reducing regulatory costs and placing news at the centre of ITV s public service programming. We will continue to lead and grow the UK TV advertising market, promoting the power of the medium to advertisers. Secondly to build new businesses for the future Whilst continuing to improve the current business, our focus is on creating new businesses and new revenue streams for the future. We have been active already, building interactive revenue streams around our programmes and developing a package of new channels like ITV2, ITV3 and ITV News Channel. We continue to work on: developing our production business to be Europe s leading commercial content provider and creating new content for new distribution media; increasing our channel line-up and seeking revenues from additional sources; building our non-advertising revenues. Corporate Governance and CR Our detailed processes for maintaining compliance with the Combined Code on Corporate Governance are set out in the Governance section of this report. As a new company we have been able to adopt processes reflecting current best practice and we are very pleased to have won the Best for Corporate Governance in 2004 Award from Legal Week magazine. We have been able to use our unique regional presence for the benefit of both the local communities in which we operate and for national campaigns such as Britain on the Move. We have published a separate Corporate Responsibility report which is also available on our website at People Etienne de Villiers retired from the Board during the year and I thank him for his contribution to ITV. I am delighted to welcome to the Board two new non-executive directors who were appointed in February Baroness Usha Prashar CBE and Sir Robert Phillis both have significant relevant media experience that will be invaluable to us as we plan ITV s future. During my first year as Chairman I have visited a number of ITV s sites around the country and have been impressed by the enthusiasm and professionalism of my colleagues at all levels. They understand the need to improve efficiency and to drive ITV forward as a single unified business. On behalf of my fellow Board members, I thank all of our management and employees for their hard work and continuing commitment. I look forward to meeting the challenges of 2005 and beyond in the knowledge that we have the best people to take the business forward successfully in a period of rapid change. Sir Peter Burt Chairman...a year of solid progress.

5 Chief Executive s review 03 In 2005 ITV is celebrating two anniversaries: we are entering the year of ITV s 50th anniversary, with ITV1 firmly established as the UK s number one commercial channel, and with ITV2 and ITV3 rapidly growing both audience and revenues; and we have just completed our first year as a single, unified company and during that period we have streamlined and improved our operations and delivered cost savings ahead of expectations in both speed and amount. I am very pleased that we have, with the support of the Board, achieved so much over the last 12 months since completing the merger, which created ITV plc on 2 February In the Operating Review in this report there is a lot more detail on the programming successes and the development of the business over the last year. Here I will focus on the principal factors affecting the Company, our people, and the outlook for the future. Results and advertising revenue The 49% growth in pro forma operating EBITA in 2004 has resulted from a combination of growing revenues and reducing costs which have significantly increased our operating margin. ITV plc s advertising revenue in 2004 across the Family of Channels (ITV1, ITV2, ITV3, and the ITV News Channel) including GMTV was up 4.7% at 1,588 million with ITV2 revenue rising strongly. ITV3 commenced broadcasting in November 2004, and its revenue contribution will rise in 2005 as advertisers are attracted by its excellent ratings performance. Each of our top five advertiser categories was up in 2004 retail, food, entertainment and leisure, cars and finance. Sponsorship revenue was also improved at 37 million in the year. Operating profit (on a pro forma basis before amortisation and exceptional items) was up by 49% to 325 million for the year. After tax and minority interests, earnings per share on the same basis were up by 76% to 6.3 pence per ordinary share. The improved profits resulted in a strong, positive cash flow with net cash inflow from operating activities of 321 million. We have disposed of a number of non-core businesses raising more than 270 million which, together with good operating cash flow, results in our having a strong balance sheet with closing net debt of 280 million. The final dividend of 1.3 pence per share will be paid on 1 July 2005 to shareholders on the register on 22 April 2005 and the ex-dividend date will be 20 April The interim and final dividends for 2004 are 1.1 pence and 1.3 pence respectively (excluding the first interim dividend of 0.5 pence per share paid on 1 July 2004 in respect of the three months to 31 December 2003). Over the medium term, the Company intends to re-balance the respective levels of interim and final dividend such that the interim represents approximately one-third of the total dividend. Increases in final dividends, such as this year s, in the absence of any unforeseen circumstances, are therefore likely to be greater than increases in interim dividends in order to achieve that objective. Schedule performance ITV s viewing performance is dependent upon the quality and popular appeal of its programmes, both those produced internally and those commissioned from independent producers. For ITV1 we remain committed to commissioning the best possible programmes to attract our mass audiences. For ITV2 and ITV3 we intend to develop our programme offering, increasing the level of investment and targeting additional acquired material over the coming months. In the two months following the launch of ITV3 at the beginning of November 2004 the combined ITV1, ITV2, ITV3 and ITV News Channel attracted a 45.0% share of all commercial impacts on UK television, compared to 44.7% in the same period in 2003 (one commercial impact being one person viewing one 30 second advertisement). The very rapid take-up of digital multichannel television in the UK, especially the spectacular growth of Freeview, helped the strong growth of ITV2 and ITV3 during that period....astrategy for the future.

6 04 ITV plc Annual report 04 Chief Executive s review Looking forward ITV s strategy for growth We are embracing the rapid change towards a fully digital multichannel environment, and are most supportive of Freeview which offers the simplest upgrade route for our viewers. The development of our ITV Family of Channels will strengthen our business in that digital environment. Our autumn schedule on ITV1 performed well, as we had expected, with a strong line-up of returning hits including another series of I m A Celebrity...Get Me Out Of Here! in late November. ITV2 has been achieving a 2.4% average viewing share of its important target demographic. ITV3, which targets a 35+ demographic, has been attracting an average 1.1% share of ABC1 adults during its first three months of transmission. ITV overall screened six of the top ten performing programmes in 2004, or seven of them excluding sports programmes. The all time commercial viewing share of the ITV Family of Channels in multichannel homes over the first six weeks of 2005 was 29.5%. Compared to the same period in 2004 this was 4% lower mainly as a result of the very high viewing shares achieved in 2004 for the third series of I m A Celebrity...Get Me Out Of Here! Lead and grow UK commercial TV market Promote effectiveness of TV advertising Strengthen ITV s Family of Channels Develop content production To be Europe s leading commercial content provider Create new content for new technologies Increase revenue streams beyond spot advertising Programming Granada, ITV s production arm, continued to be the most significant supplier of programmes internally to ITV1, ITV2 and ITV3, and is a major supplier to many other broadcasters in the UK and internationally. In 2004 total external sales were 267 million made up of: original productions for the UK and overseas markets of 102 million; the distribution and exploitation of rights and products of 109 million; and facilities and education turnover of 56 million. We have improved our profit margins by concentrating on high value programmes, and we have substantially increased our international production slate with a number of returning shows and formats such as Nanny 911 in the US and Hell s Kitchen. Regulation At the same time that ITV plc was being created, so too was our regulator Ofcom as five separate regulators became one on 29 December We have developed a working relationship with Ofcom during 2004 which is essential for the many regulatory processes and reviews due in 2005 and beyond. Following the grant in December 2004 of our new digital broadcasting licences for ITV1 (replacing the old analogue licences) these processes now include: the review of the financial terms of our ITV1 licences from 2005; Ofcom s review of Public Service Broadcasting ( PSB ) and their forthcoming review of television advertising; and ongoing discussions about how the regulation of television generally should develop to be appropriate to the changing media landscape.

7 05 The first issue the review of the financial terms of our ITV licences is due for decision in the summer and will be effective from 1 January The licence fee structure dates from the time that ITV1 was the UK s sole commercial television station, and there was value in the scarcity of spectrum allocated for television broadcasting. Today there are many hundreds of TV channels available in the UK and yet in 2004, ITV1 paid a licence fee (net of the digital licence rebate) of 204 million. Channel Five by contrast paid less than 20 million and none of C4, the BBC, BSkyB nor any other broadcaster paid any such amount at all. Achieving an equitable outcome to this review is one of our short term priorities for Many of the potential regulatory opportunities, however, lie beyond We expect the review of Public Service Broadcasting to be ongoing, with progressive reductions in the level of our mandated programming. This reflects an acknowledgement that, as we move to a digital multichannel world, there is more choice already available to viewers and less reason to require such PSB programming of one commercial broadcaster and not of others. A first step this year will see the mandated hours of non-news regional programming reduced by 1.5 hours per week in the English regions and reducing further in We remain committed to producing much of our network programming in the regions, but our viewers do not recognise the benefit of non-news regional programmes as a separate product. The Contract Rights Renewal ( CRR ) remedy, under which we operate, governs the sale of ITV1 airtime. Airtime in the UK is sold via the Station Average Price mechanism, which was established by the market, not ITV alone. Ofcom have indicated that they are planning to hold a review of the airtime sales market, and we are keen to work with them in identifying other airtime sales models. Alongside those reviews we are also seeking to promote discussions about other areas of regulation. Firstly, there are already significant differences between the form of advertising and sponsorship that is currently permitted in America on one hand and in the UK and Europe on the other. Secondly, television is an evolving medium and the effects of interactivity, PVRs, broadband and mobile distribution, all create possibilities which the current regulation never envisaged. We will work with our regulators to ensure that the regulatory environment evolves at the same rate as the medium and technology themselves evolve. Outlook 2005 has started strongly. With Easter falling in March this year rather than April in 2004, March revenues have benefited from those advertisers who seek Easter airtime. This has contributed to ITV plc s first quarter revenues across all the ITV Family of Channels, including a first time contribution from GMTV, being up by 56 million which is a very encouraging start to the year. Within that, ITV2 advertising revenues have grown very strongly in the quarter to March 2005, up by 90% on 2004, whilst ITV3 has made a first time contribution. Under the CRR remedy we have been engaged with our advertising customers in completing their advertising contracts for We have been very pleased with the level of support from many of those customers in renewing their contracts. Summary We have achieved a great deal during 2004 having made One ITV a reality. We have now delivered increased revenue, reduced costs, a more efficient structure and a very significant improvement in both profit and cash flow. Our executives and employees have been key to that process, both achieving the aggressive targets set for them and identifying further actions that have helped to exceed those targets in many areas. I would like both to thank them for that, and to say how pleased I am that, as we now move to the next phase of developing ITV s business for the future, we will continue to have such talented people supporting us in those efforts. Charles Allen CBE Chief Executive

8 06 ITV plc Annual report 04 Our genre Drama Delicious... the direction, by Andy Wilson, is a good deal more stylish than we ve been used to in the past The Independent on ITV1 s Marple The top five dramas of 2004 were all shown on ITV1. The best new series of 2004 Doc Martin; best one-off comedy drama of 2004 Christmas Lights; and best performing drama in 2004 ATouch of Frost were all shown on ITV1. Image: Agatha Christie s Marple

9 07...award winning drama.

10 08 ITV plc Annual report 04 Our genre...best loved soaps.

11 09 Soaps Coronation Street won a BAFTA for best continuing drama and a host of awards at the British Soap Awards and National TV Awards. Coronation Street also won The South Bank Show Award for best drama. This is the first time a soap has ever been nominated. 29m viewers per week (52%). Coronation Street is still the nation s favourite, with Emmerdale rivalling EastEnders in the No. 2 slot. Image: Coronation Street

12 10 ITV plc Annual report 04 Our genre...world-class entertainment.

13 11 Entertainment Totally Compelling The Guardian on ITV1 s I m A Celebrity...Get Me Out Of Here! s viewing share 54% average viewing (I m A Celebrity Series 3) 49% average viewing (Saturday Night Takeaway) 47% average viewing (The X Factor) Image: I m A Celebrity...Get Me Out Of Here!

14 12 ITV plc Annual report 04 Our genre News and current affairs ITN covered the Asian Tsunami with classic go-getting panache The Guardian on the ITV News coverage of the Asian Tsunami disaster. 926 hours of network news was created in 2004 for ITV1. The 6 7pm slot was the most improved hour on ITV1 in Image: Sir Trevor McDonald on the ITV News set...groundbreaking news.

15 13

16 14 ITV plc Annual report 04 Agatha Christie s Poirot Operating review ITV1 schedule performance 2004 Once again, ITV1 was the most popular channel in the all-important peak-time viewing segment. ITV1 broadcast six of the top ten programmes of the year. Excluding sport, ITV1 broadcast the top two programmes of the year an episode of Coronation Street (16.3 million and 58% share) and the final of I m A Celebrity Get Me Out Of Here! (15 million and 56% share). ITV1 also broadcast eight of the top ten dramas; the most popular new drama series on any channel Life Begins and the best performing one-off new comedy drama Christmas Lights. We also broadcast five of the top ten films and five of the top ten entertainment programmes. The top performing programme on ITV1 in 2004 was the Euro 2004 France vs. England match which attracted 17.8 million viewers and a 66% share. Across the whole year, ITV1 had an average peak-time audience of 6.9 million and a 31% share. This compares to 5.9 million and a 26% share for BBC1. In contrast, our commercial rival Channel 4 had a peak-time average of two million viewers and a 9% share. ITV1 continues to deliver mass audiences for advertisers. In 2004, all programmes on commercial channels that had ten million viewers or more, and 95% of programmes that had five million viewers or more, were on ITV1. This outstanding performance reflects the substantial investment of 850 million that was made in the ITV1 schedule. This is far more than other commercial broadcasters. In any one day, ITV1 reaches 47% (26 million) of the UK population. This is eight million viewers more than Channel 4 and 14 million more than five. The ITV Family of Channels reaches 10.7 million more viewers in peak-time than Channel 4 in an average night. Daytime Daytime was a particular priority for ITV1 in We acquired a further 25% interest in GMTV, bringing our holding to 75%. GMTV is the UK s Number 1 breakfast time TV show regularly attracting a 26% viewing share. We have seen good progress year-on-year in the weekday slot, building on the improvements already made in This Morning remains an informative and lively show, regularly winning its slot, with an average 1.2 million viewers and 27% share. During 2004, it had interviews with the Chancellor of the Exchequer and the Prime Minister in addition to its usual mixed diet of lifestyle and consumer strands. We were particularly pleased with the success of The Paul O Grady Show which launched in the autumn. This show gave a significant boost to the highly competitive 5-6 pm slot, delivering at its peak more than three million viewers. It will return in 2005 and we are planning new strands to further increase interactive revenues.

17 15 Doc Martin Dirty Filthy Love Life Begins Drama ITV led the way in showing high quality, original UK drama productions in It was an exceptionally strong year with our dramas consistently attracting critical acclaim and large audiences. ITV1 broadcast a mix of single dramas and series, featuring the best performing, writing and production talent. This included Life Begins, the year s most popular new drama series, starring Caroline Quentin, averaging 9.9 million and 39% share. Another highlight was Doc Martin starring Martin Clunes as a doctor whose truculence and tactless manner causes mayhem in a small Cornish community. Doc Martin regularly attracted more than 9.0 million viewers and won the coveted Best TV Comedy at the British Comedy Awards. Both were among the top ten dramas of the year shown on any channel and both will return in The popular William and Mary also returned averaging 8.5 million and 34% share. ITV1 also aired a number of single dramas. The touching Belonging, with Brenda Blethyn, Kevin Whately and Anna Massey, told the story of a woman rebuilding her life around the lives of those she cares for after her husband leaves. Dirty Filthy Love, produced by Granada, was a humourous and poignant single drama about a man with obsessive compulsive disorder, and won the award for best one-off drama at the 2005 Broadcast Awards. Geraldine McEwan starred as Miss Marple in four new adaptations of classic Agatha Christie mysteries told with new twists. Foyle s War, starring Michael Kitchen, returned and was again a hit with a 34% share of all viewers and 34% share of ABC1 viewers. Our banker shows in the ITV1 schedule all performed strongly, with gripping storylines and good ratings. Emmerdale went from strength to strength and attracted more than 9.0 million viewers on average. It also outperformed an episode of EastEnders for the first time in Coronation Street remained the highest rating drama programme of the year with 16.3 million viewers tuning in to the Tracey, Karen and Steve love triangle storyline in February Coronation Street won a BAFTA for best continuing drama and a host of awards at the British Soap Awards and National TV Awards. Coronation Street also won The South Bank Show Award for best drama. This is the first time a soap has ever been nominated. In 2005 we are planning to add interactivity to enhance viewer appeal and revenues. Other drama successes came in the form of returning series Heartbeat, The Royal, and Midsomer Murders all of which averaged more than 9.0 million viewers and A Touch of Frost which was the best performing one-off drama of the year with 13 million viewers.

18 16 ITV plc Annual report 04 Operating review The X Factor The Paul O Grady Show Hell s Kitchen Entertainment The entertainment genre is the second most powerful driver of ratings in ITV1 s schedule, after the soaps saw ITV1 consolidate its position as the home of high-quality family entertainment, broadcasting 11 of the top 20 entertainment shows on TV. In February, I m A Celebrity Get Me Out Of Here! generated more than 100 front page splashes and was a clear example of the attraction of talked-about TV. The final was the highest-rating entertainment programme of the year, peaking with 15 million viewers. The programme had a second run in the autumn and still proved compulsive viewing. Hell s Kitchen was an ambitious new format, proving popular and peaking with 8.6 million viewers. Some of the biggest names in entertainment Ant and Dec, Simon Cowell, Sharon Osbourne, Chris Tarrant and Michael Parkinson all ensured that Saturday nights and ITV were back on the family-viewing agenda in 2004 with inventive, creative and high-energy programming. ITV was delighted to sign Michael Parkinson and his show has established itself quickly, attracting a stellar range of guests, including Tom Cruise, Kevin Spacey, Denzel Washington, Renee Zellweger and Dame Judi Dench. Parkinson on ITV has attracted an average audience share greater than his last series on the BBC. Ant and Dec s Saturday Night Takeaway powered ITV1 s Saturday night autumn schedule averaging eight million viewers and 49% of the commercially valuable demographic. Ant and Dec won the Rose d Or for Best Gameshow Presenters and Best Variety Show, along with two National Television Awards. TheXFactor proved to be compelling viewing with the final programme watched by a total of 10.2 million viewers, with a 50% share of 16-34s. Taken together, ITV s Entertainment output succeeded in improving its appeal to the year old audience, making it the favoured option for young adult viewers and outstripping the performance of ITV s closest commercial competitors. Comedy ITV1 broadened the inventiveness and range of its comedy output in 2004, bringing new talent to the channel. Hardware continued to provide intelligent writing and performances and Shane attracted 29% of 16-34s. The All Star Comedy Show features many established names in comedy such as Steve Coogan, Vic Reeves and Bob Mortimer. Topical animation 2DTV continues to be critically acclaimed and develops new writers, voice artists and satirists. In the highly original Director s Commentary Rob Brydon re-voiced old films as the monstrous but brilliant creation of film producer Peter de Lane. The best one-off new comedy drama performance came from Christmas Lights starring Mark Benton and Robson Green with an average of more than 11 million viewers and a 44% share of individuals. This show has now been commissioned as a series for ITV.

19 17 Michael Parkinson with Tom Cruise Current affairs and factual ITV1 continues to provide a varied line-up of hard-hitting documentary and lighter factual programmes. In 2004 the flagship documentary series Real Life attracted some of the country s best documentary makers and the series won the recognition of many critics. Editions included Too Scared for School, a film about bullying and Children of the Miners Strike about heroin addiction in former mining towns. Bad Lads Army had a very successful run in peak-time, with a 32% share, putting it in the top ten factual shows of the year. An exceptionally well-made piece of television, using inventive graphics and story telling, the series conscripted a group of young men with criminal records into 1950s style army training. News The dawn of ITV plc brought considerable benefits to the operation of ITV News. For the first time in half a century of broadcasting, ITV Network News provided by ITN and the ITV regional newsrooms in England and Wales under the ownership of ITV, are able to work together as one coherent and highly effective news network. The management of ITV News wasted no time in leveraging this development and the result has been a critical and commercial success. The year provided many challenges; Boscastle, Beslan, the ongoing conflict in Iraq and of course the worst natural disaster in living memory the Asian Tsunami. Each and every challenge was met with an exceptional response from ITV News. On Boxing Day, within hours of the first news of the Tsunami, ITV News despatched correspondents, producers and engineers to the worst affected areas. The swiftness of response and the quality of those despatched enabled ITV News to outflank both the BBC and Sky. In addition to extended news coverage, ITV News produced a half hour special on 27 December and a further one hour special. The extraordinary work of ITV News teams drew unprecedented critical acclaim. The team of correspondents and the quality of ITV News was recognised with a host of awards presented in 2004: at the RTS Journalism Awards: Programme of the Year for the ITV Evening News; Best News (International) for Baghdad coverage; RTS Television Journalist of the Year for John Irvine; and Best Innovative Application for the ITV News set at the RTS Technical Innovation Awards. ITV News also won the Broadcast Award for best news programme for its coverage of the Beslan School siege. In one of the bravest pieces of television journalism, Julian Manyon and his crew provided extraordinary coverage of the unfolding siege at the school in Beslan. Manyon entered the school ahead of any other journalist, commenting live on the devastation he found.

20 18 ITV plc Annual report 04 Operating review Mark Austin reporting from the scene of the Tsunami ITV s breaking news on the Beslan hostage crisis Reporting from Boscastle The ITV News Channel also had a strong year, continuing to make and break news ahead of the competition, including David Blunkett s resignation. We also successfully introduced a fresh approach to rolling news, offering breaking news together with context and analysis. The ITV News Channel benefits from cross-promotion on ITV1 and by being able to draw on ITV News correspondents and presenters who are familiar faces to our viewers. We will continue to provide viewers with a high quality, highly competitive, impartial and accurate news service at the international, national and regional level. Sport ITV Sport had a very successful The main football event was the European Championship, which the channel covered throughout June with high profile games broadcast on both ITV1 and ITV2. Almost 18 million people tuned in for England s opener against France on ITV1 the biggest rating show of the year for the channel and more than 14 million viewers watched England play Switzerland. ITV broadcast its 12th year of Champions League coverage, which still proves a massive draw with football fans. 6.3 million viewers watched Chelsea lose a thrilling semi-final in April and when the tournament started up again in September, 5.7 million people tuned in to see Wayne Rooney make his hat-trick debut against Fenerbache at Old Trafford. ITV won numerous plaudits for its comprehensive coverage on ITV1 and ITV2 of the Tour de France in July. Formula One remains extremely popular and the emergence of Jensen Button last year increased British interest. The US Grand Prix peaked with five million viewers and Monaco with a 38% audience share. The British Grand Prix pulled in 3.6 million viewers and a 35% share up 14% year on year. Children s 2004 saw increasing competition for young viewers from 19 dedicated children s channels, aggressive scheduling on BBC1 and significant cross-promotion of their dedicated children s channels. Despite this, ITV has broadcast a wide range of programmes and won a number of awards. Highlights of the year included My Life as a Popat, the first British Asian drama in children s television. Scary Sleepover developed a ground breaking new format and was devised in response to research with children. My Parents are Aliens returned, continuing to set new standards in comedy and design. Butterfingers was an excellent football drama, produced and cast in Scotland and dealing with diversity issues. The teen drama Girls in Love picked up the Best Children s Drama award at the RTS Programme Awards. Jungle Run, produced by Granada, won an award at the RTS Craft and Design Awards. Engie Benjy, also produced by Granada, encouraged pre-school children to interact by talking directly to them on screen. Saturday mornings have continued to present a challenge against tough competition. Ministry of Mayhem debuted in 2004, replacing SM:TV. CD:UK remains popular later on Saturday morning. In 2005 we have launched an exciting new series of Captain Scarlet using CGI animation in this timeslot.

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