By Costas Pitas
LONDON (Reuters) - ITV, Britain's largest free-to-air broadcaster, said on Wednesday it was on the hunt for acquisitions as it posted an increase in revenue that will help fund another special dividend for shareholders.
ITV said it would pay 161 million pounds in the special dividend of 4.0 pence a share, in line with 2012, and a full-year dividend of 3.5 pence, up 35 percent from 2012.
Although revenue was slightly better than expected, ITV's shares were down 3 percent at 1140 GMT, with some analysts saying the dividends were less than expected.
Ian Whittaker at Liberum Capital said he had expected a special dividend of at least 200 million pounds and the market consensus for the ordinary-share dividend was 4.1 pence.
Chief Executive Adam Crozier ruled out a bid for fellow British free-to-air broadcaster Channel 5, with first-round offers due in on Thursday, but said ITV was continuing to look for acquisitions.
"We're being very clear that if appropriate (acquisitions)come up and we think they add something to ITV Studios ... then we will look at those key opportunities," he told reporters.
The two key markets in terms of creative content were the United States and the UK, said Crozier.
"If you look at where our acquisitions in the main have been, it's been in those countries," he said.
Crozier said ITV, now in the fourth year of a five-year turnaround, was now much stronger both operationally and financially.
The company reported a 9 percent rise in external revenue to 2.39 billion pounds in the year to December 31.
Non-advertising revenue rose 17 percent to 1.21 billion pounds, driven by a good performance at production unit ITV Studios, which sells content globally, as well as online, pay and interactive services.
Core earnings were up 21 percent to 620 million pounds, aided by cost savings of 28 million pounds in 2013, with further cuts of 10 million pounds targeted in 2014.
ITV Studios saw a 20 percent rise in revenue last year to 857 million pounds following the acquisition of four production companies.
Crozier said he expected continued double-digit growth in ITV's online, pay and interactive division in 2014, with the broadcaster looking to increase revenue from pay-TV.
In January, ITV said it was launching its first pay-TV channel, dedicated to British drama, on Sky's satellite and online platforms.
Total net advertising revenue (NAR), a key industry indicator, grew 2 percent in 2013. Crozier said NAR was expected to grow by 5-6 percent in the first four months of 2014.
But analyst Keith Bowman at Hargreaves Lansdown sounded a note of caution that advertising was increasingly volatile as the importance of having live sporting events with guaranteed audiences increased.
In November, BT won the right to show Champions League football from 2015, replacing ITV and BskyB. ITV is still likely to gain from events such as the 2014 World Cup.
(Reporting By Costas Pitas; editing by Belinda Goldsmith and Tom Pfeiffer)