ITV expects total advertising revenue to decline 6-7% year on year in Q4, the broadcaster announced as part of its Q3 trading update.
The anticipated fall is being attributed to a tough comparable against last year’s Rugby World Cup, but ITV also noted that Q4 ad bookings were “impacted by the uncertainty in the lead-up to the UK budget”.
A recent Advertising Association/Warc report found that while overall adspend for the Christmas period is expected to grow 7.8% to reach £10.5bn, investment in TV advertising is expected to decline 4.3%. That said, the study expects broadcaster VOD experience the same growth rate as overall spend at 7.8%.
ITV’s total ad revenue was flat in Q3 and is expected to be up 2.5% for the full year.
Over the first three quarters of 2024, total ad revenue has grown 6.5% to £1.3bn, due in part to a better-than-expected Q2 performance amid the 2024 Euro football tournament.
Digital ad revenue, meanwhile, has grown 15% over the first nine months of the year, while streaming service ITVX has seen a 15% increase in total viewing hours to 1.1bn.
CEO Dame Carolyn McCall commented: “ITV’s good strategic progress has continued in the first nine months of 2024, driven by strong execution and industry-leading creativity.”
Studios revenue drops
Across the whole business, however, revenue has dropped 8% year on year in the first nine months of 2024 to £2.7bn, due primarily to a large decline in ITV Studios.
Revenue at ITV Studios fell 20% to £1.2bn — something the broadcaster attributed to “the expected phasing of production deliveries, which are heavily weighted to Q4”, lower demand from free-to-air broadcasters in Europe and the impact from last year’s US writers’ and actors’ strikes.
ITV expects the strikes will delay roughly £80m in revenue from 2024 to 2025.
However, the broadcaster notes that the Studios arm is on track to deliver “an unusually high number of products” in Q4.
McCall said that “ITV Studios is performing well despite the expected impact of both the writers’ strike and a softer market from free-to-air broadcasters”, adding that ITV Studios’ Q4 has begun in line with expectations — something that “will ensure record profits in 2024”.
More cost savings to come
Thanks to cost-savings efforts, ITV Studios is still expected to deliver a record adjusted Ebita (ITV’s measure of profit) at a margin between 13% and 15% for full-year 2024.
However, ITV expects the division’s total revenue to decline by the “mid-single digits” this year. From 2021-2026, the broadcaster projects ITV Studios will deliver organic growth of 5% on average per annum.
In addition, ITV announced it will be instituting further cost savings worth £20m in 2024, including a £10m reduction in content costs. The other £10m will come from non-content savings being brought forward from 2025.
McCall explained: “Coupled with our strategic delivery and revenue outlook, this continues to give us the confidence that we will deliver an increase in group profit this year.”
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