Free-to-air broadcaster ITV (ITV) held an investor seminar earlier this week to showcase the strengths and future strategy of its Studios content production business, which accounts for around a third of group revenues.
The presentation highlighted the group’s key objectives for the division, including getting back to 2019's level of revenues by next year and future organic growth of ‘at least’ 5% per year on average.
The firm also aims to double the number of high-end scripted hours to 400 per annum by 2026 and increase the proportion of revenues from streaming platforms from 14% currently to about 25% by 2026.
This new set of objectives for the content production division follows the group's upbeat nine-month trading update, which showed revenues for both its broadcasting and studio production business above 2020 and 2019, helping to offset its more volatile advertising income.
AMERICAN OPPORTUNITY
The American market accounts for around 38% of global content spend and presents a significant growth opportunity. ITV already has a strong reputation in the highly competitive U.S. scripted television market.
ITV Studios America has delivered consistent double digit annual revenue growth, with productions including Snowpiercer (shown on TNT for four seasons), Physical (Apple TV+ for two seasons) and Ten-Year-Old Tom (HBO Max for one season) and 85% of its output achieving multi-season renewals.
This year, ITV Studios America has more than doubled production with 59% of revenues coming from streaming. Looking forward it has projects in production or paid development at every major US streaming service.
Shore Capital analyst Roddy Davidson says he doesn't believe ITV's 'cash generative qualities or strategic attractions are reflected in its current valuation', and calls the recent share price performance (down 3% over three months) 'anomalous'. 'Specifically, we estimate a fair value of 180p per share’, says Davidson.
READ MORE ABOUT ITV HERE
