Despite a challenging advertising market, free-to-air broadcaster ITV (ITV) reported a strong set of results for the six months ended 30 June 2023.

Looking forward ITV expects TAR (total advertising revenue) to be down 4% in July 2023 and up 7% in August. The company said: ‘It is too early to give a forecast for September, but early signs are positive, and we expect to see growth in TAR in the third quarter, with continued strong growth in digital advertising revenues.’

Investors welcomed the half-year figures with the shares making gains in early trading. ITV shares are down, however 8% in 2023 due to a tough trading environment for the media sector over the past 12 months.

Total external revenue was down 2% to £1.63 billion but this was offset by an impressive performance by ITV Studios which delivered an 8% increase in revenue to £1 billion driven by the UK.

Group adjusted earnings before interest, tax and amortisation was down 52% to £152 million as expected.

CONTINUED MOMENTUM SAYS MCCALL

Carolyn McCall ITV CEO said: ‘The continued momentum behind ITV's strategic transformation delivered strong growth in Studios and Digital revenues in the first half of the year, largely offsetting the expected weakness in the UK advertising market - with total revenue declining just 1% in the first half, even in a very tough advertising market.

‘We remain on track to achieve all our KPI (key performance indicator) targets which gives us confidence we will deliver at least £750m of digital revenue by 2026.

‘As we said at the full year results in March, 2023 is the year of peak net investment in our streaming business and we expect profit to grow from here.’

The free-to-air broadcaster also said that in the future its results are likely to benefit from the return of popular reality TV show Big Brother, the Women’s World Cup and the Rugby World Cup.

REASSURANCE GIVEN ON HOLLYWOOD STRIKES

In a media briefing, McCall reassured investors that the current Hollywood strikes by actors and writers ‘would have little effect’ on production at ITV Studios due to the diversified nature of this business – ITV’s script writers are not solely based in the US.

The percentage of total ITV Studios revenue from streaming platforms grew to 27% for the six months ending 30 June with commissions or development deals with most of the major streamers, the company said.

The free-to-air broadcaster also reported the successful integration of its recent acquisition, Plimsoll Productions.

Original commissions such as A Year on Planet Earth on ITVX and ITV1 and Big Beasts on Apple TV+ ‘have all been delivered.’

EXPERT VIEW

Roddy Davidson, analyst at Shore Capital – ITV house broker – said: ‘We are reassured to note that ITV is performing broadly in line with expectations against a challenging backdrop and note today’s positive commentary around digital revenues and momentum in Studios.

‘The challenging advertising highlighted above is no great surprise and there is a limited amount that ITV can do to avoid its impact on linear revenues. That said, it is pleasing to see the digital category performing strongly and ITV Studios showing significant momentum.’

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