- Advertising slump hits TV broadcaster
- Digital revenue for streaming hub ITVX up 29%
- Shore Capital analyst is 'reassured'
Free-to-air broadcaster ITV (ITV) saw its shares fall nearly 5% to 73p in morning trading as it issued cautious guidance for the second quarter of 2023.
For the first quarter of the year it reported a 7% fall in advertising revenue to £776 million for the three months to 31 March 2023 compared to £834 million in the same period last year.
Media and Entertainment and the ITV Studios production business reported a 9% fall in revenue to £495 million and a flat out-turn of £457 million respectively.
Although ITV Studios revenue did benefit from foreign exchange and a wide range of new and returning programmes and formats in the UK and internationally.
Deliveries in the UK and internationally included Nolly for ITVX, Django for Sky, Big Beasts for Apple TV+ and Queer Eye for Netflix.
ADVERTISING REVENUE DOWN
Carolyn McCall, CEO of ITV said: ‘ITV continued to make significant strategic progress in the quarter and all parts of the business performed in line with expectations.’
However, McCall said the TV broadcaster was hit by a downturn in advertising: ‘Total advertising revenue (TAR) in Q1 was down 10% - as expected and better than the wider TV advertising market. We are looking forward to Q3 with Love Island and the Rugby World Cup set to draw large broadcast and streaming audiences.’
STRONG STREAMING SERVICES
The company launched its ITVX streaming hub (which is free but ad-funded) in November last year and has achieved a 49% increase in streaming hours and a 29% growth in digital revenue for the first quarter.
McCall said: ‘Exclusives, such as Nolly and The Twelve attracted new viewers, 80% of whom went on to explore other content on ITVX. In addition, live simulcast viewing of our biggest shows and sports events, including Love Island and the FA Cup attracted large streaming audiences.’
The company said going forward that it will continue to ‘manage its costs tightly’.
‘We remain committed to delivering £15 million of cost savings in 2023 as part of our previously announced £50 million cost saving target by 2026. This is in addition to the £106 million cost programme delivered between 2018 and 2022. ITV's balance sheet remains robust, enabling us to invest behind the strategy and deliver returns to shareholders in line with our capital allocation policy,’ it added.
POSITIVE BROKER COMMENT
Despite the cautious tone adopted by the broadcaster, analyst Roddy Davidson at Shore Capital said: ‘We are reassured to note that ITV is performing in line with expectations against a challenging backdrop and note today’s positive commentary around digital revenues and momentum in Studios.
‘ITV’s share price has declined by circa 12% over a three-month view, giving back some of the positive momentum experienced in the run up to its full year results in early March when we suggested some profit taking might occur (+40% over the previous six months).
