- Companies are being more cautious with advertising spend
- Recent share price rally comes to an end
- ITVX off to a good start
A bleak outlook for advertising income has cast a dark cloud over ITV’s (ITV) earnings potential and triggered a 3% decline its share price to 85.57p.
The company warned total advertising revenue could be down 11% in the first quarter of 2023 versus last year, and then down between 10% and 15% in April.
Uncertainties over the strength of the economy and consumers’ ability to spend have led companies to pare back their advertising spend, and that’s bad news for ITV which generates a lot of its income from carrying promotions across its TV channels.
Markets are forward looking and what happens next is more important to the share price than what ITV has already achieved.
Total advertising revenue was down 1% in 2022 as expected, within this digital advertising revenue was up 17% to £343 million.
The company recently launched its ITVX streaming hub and the results are so far encouraging. It said: ‘In its first two months since launch, ITVX has attracted more users, and harder to reach lighter viewers, who are spending longer on ITV's digital content. In the first two months, ITVX attracted 1.5 million new registrations, saw total streaming hours grow 69% and streaming hours of lighter viewers grow 94% compared to the same period in the prior year on ITV's streaming platforms.’
Chief executive Carolyn McCall called the launch ‘a major digital milestone’ and said the platform has received a positive reception from viewers and advertisers. She added that ITVX offered an expanded range of original content and ‘a superior user experience’ which should engage more viewers.
‘As a result of ITV's deliberate strategic actions and strong execution, ITV has a scaled and expanding global production business, a rapidly growing targeted digital advertising business, a resilient linear TV advertising business and a unique vertically integrated producer broadcaster and streamer model,’ commented McCall.
‘This means that ITV is now a demonstrably more balanced business which is ideally placed to take advantage of the growing demand for quality content from viewers, broadcasters and streamers and take a larger share of the digital advertising market.’
The percentage of total ITV Studios revenue from streaming platforms grew from 13% to 22% with commissions or development deals with most of the major streamers. As a result, ITV has increased its target for 2026 from 25% to 30%.
The TV broadcaster said 19 formats were sold in over three countries including shows My Mom, Your Dad and Make Love Fake Love.
Total ITV Studios revenues in 2022 were 15% higher than 2019 with a record Q4 which was stronger than expected due to the phasing of deliveries.
