ITV’s advertising revenue fell 10 per cent in the three months to the end of March, in line with expectations.
The group said the fall in advertising sales should be cushioned by the next series of reality TV favorite Love Island and the FA Cup final on June 3, which looks set to bolster Treasury in this regard.
ITV Studios also saw revenue fall 7 per cent to £776m from £834m at the same point a year ago, a steeper drop than analysts had expected.
Money from advertising: ITV saw its advertising revenue fall by 10% in the three months to the end of March
ITV shares fell 3.68 percent or 2.84p this morning to 74.28p, after rising about 8 percent over the past year.
Revenue from the group’s Media & Entertainment arm fell 9 percent to £495 million, down from £545 million in the same period last year.
But ITV said it was moving ahead with phase two of its More Than TV strategy – its efforts to become a “vertically integrated producer, broadcaster and streamer” – despite “the current challenging macro and geopolitical environment”.
While overall advertising revenue fell 7 percent, digital advertising revenue rose 30 percent year-on-year to £87 million.
The broadcaster said ITVX, its ad-funded streaming service, “continues to perform strongly”. Total digital revenue increased by 29 percent during that period and total streaming hours increased by 49 percent.
Exclusive programs such as Nolly and The Twelve attracted new viewers, 80 per cent of whom went on to explore other content on ITVX, according to ITV.
It added: “We maintained our strength in delivering mass reach with 93 percent of the top 1,000 commercially broadcast TV programs and 34.4 percent of channel commercial viewing.”
ITV expects ITV Studios to achieve average organic revenue growth of at least 5 percent per annum through 2026.
It said: ‘In 2023, we are on track to deliver mid-single-digit sales growth, ahead of the market, following record sales in Q4 2022 and phasing deliveries within 2023 weighted to the second half.’
The group said it was ‘committed’ to deliver an adjusted EBITA margin for ITV Studios of 13 per cent to 15 per cent over the period to 2026.
Through initiatives such as ITVX, the group said it still expects to generate at least £750 million in digital revenue by 2026.
When it comes to future total advertising revenue, ITV said the outlook is “challenging, as expected given the current macroeconomic environment with a TAR forecast of 12 per cent in the second quarter.”
Currently: ITV is showing I’m a Celebrity Get Me Out Of Here South Africa right now
ITV is continuing its plan to cut costs by £15m this year, with a target of saving £50m by 2026. This comes on top of the £106m cost program delivered between 2018 and 2022, ITV said.
The group said: ‘ITV’s balance sheet remains robust, enabling us to invest in strategy and deliver returns to shareholders in line with our capital allocation policy.’
Carolyn McCall, CEO of ITV, said: ‘ITV continued to make significant strategic progress this quarter and all areas of the business performed in line with expectations.’
Total ad revenue was down 10 percent in the first quarter — as expected and outperforming the broader TV ad market. We look forward to the third quarter with Love Island and the Rugby World Cup drawing huge audiences on broadcast and streaming.
“ITV is successfully executing phase two of its More Than TV strategy, despite the current challenging macro and geopolitical environment, as we continue to meet the growing demand for content worldwide and advertisers’ desire to deliver both mass reach and targeted secure digital public.’
Richard Hunter, Head of Markets at Interactive Investor, said: “ITV remains a tough watch, with a drop in revenue partly offset by a promising launch of the ITVX streaming service.”
He added: “The share price has been faltering lately, falling 14 percent in the last quarter, possibly due to as-yet-unsubstantiated rumors of a partial sale of the Studios business, which the dynamics of the listed company could completely change. group.
Over the past year, however, the price is up 15 percent, compared to a 1.9 percent drop for the broader FTSE 250.
The shares have had a volatile past, they’ve been in and out of the FTSE 100 as fortunes faltered, and the price has continued to drop 52% over the past five years.
“Despite the progress being made within ITVX and Studios, investors remain skittish about the outlook, as evidenced by an initial share price reaction that reflects broader and more obvious concerns about overall ad revenue.
“The market consensus on the stock as a prudent buy may offer some positive hope that the group can make its own strategic progress.”
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