ITV’s total revenue fell 1% year on year to £2.76bn, the broadcaster announced in its Q3 earnings update.
Both its Media & Entertainment (M&E) and Studios businesses reported 1% declines in revenue, to £1.43bn and £1.33bn respectively.
M&E recored 7% year-on-year growth in digital revenue to £461m, including 6% growth in digital ad revenue, with ITVX “maintain[ing] good momentum” following this summer’s Fifa World Cup, according to ITV CEO Dame Carolyn McCall. Total streaming hours on the service were up 29% to a record 2.15bn.
However, this growth was more than offset by a decline in linear advertising revenue. Total ad revenue fell 8% in Q3 and 1% in the first nine months of the year. ITV noted that this is “outperforming broadcast competitors” but “slightly below previous guidance”.
The company cited “macroeconomic uncertainty, increased digital advertising on global streaming platforms and the impact of less healthy foods regulations” as contributing to the worse-than-anticipated result.
According to the latest Advertising Association/Warc figures, the overall UK TV ad market grew 2.6% in Q2, with growth driven primarily by addressable options (+12.7%). While broadcasters still retain significantly larger audiences than ad-supported tiers of streamers such as Netflix, Amazon Prime Video and Disney+, increased competition from the global streaming giants has appeared to reduce the market for the likes of ITVX.
“Demand for advertising in H2 has weakened,” McCall said. She added that the broadcaster will take “decisive action” to deliver £25m in additional “temporary” content cost savings and £5m in discretionary non-content cost savings in Q4 to stem losses.
McCall continued: “While the outlook for advertising remains muted, we are firmly focused on self-help and mitigating actions, while continuing to execute our strategic priorities to drive performance across both businesses.”
While ITV is forecasting digital revenue will be profitable this year, the broadcaster now expects total ad revenue to fall between 5% and 10% in Q4, and between 2% and 3% for the full year.
Sky update
The results come as the broadcaster still expects to sell its M&E business to Sky by H2 2027. According to McCall, the sale is “progressing as planned”. This month, the Department for Culture, Media & Sport (DCMS) sent letters to Sky and ITV informing the broadcasters that culture secretary Lisa Nandy has referred the proposed £1.6bn acquisition for investigation.
McCall called this “an expected and important milestone in the regulatory review process”, adding that ITV is “pleased that it is moving at pace”.
At The Future of Media London conference last week, Channel 4 chief commercial officer Rak Patel said the ITV/Sky deal “needs scrutiny”, raising concerns that the deal could affect news provision (Channel 4 and 5 both receive their news programming from ITN) and “distort” the TV ad market. Paramount president of international advertising Lee Sears also said the deal could lead to “a big concentration of sport” broadcasting.
Patel said Channel 4 will make appropriate representations to DCMS at the relevant time.
As for ITV’s Studios arm, McCall said performance was in line with expectations, with production deliveries and licensing deals “heavily weighted” to Q4. The division has, however, secured a greater proportion of its full-year revenue than at this point in the previous year.
McCall expects Sky’s acquisition of ITV’s M&E business to “position ITV Studios as a highly attractive, pure-play, global content business”.
ITV’s share of commercial viewing also inched up 0.9 percentage points to 32.7%. Its share of the top 1,000 commercial broadcast TV programmes grew two percentage points to 92%.
