ITV revenue rises 1pc despite advertising downturn

The FTSE 250 broadcaster said the growth in revenue from ITV Studios and M&E digital revenues offset the decline in linear advertising revenue as it continued to diversify its business.

However, total external revenue remained flat at £2.53bn.

ITV Studios saw significant growth, with total revenue up 9% to £1.52bn compared to £1.39bn in 2022.

The company said ITV Studios achieved that by delivering a range of new and returning programmes and formats, both in the UK and internationally, diversifying across genres, geographies, and customers.

Notable productions included Fifteen Love for Amazon Prime, Love Island USA S5 for Peacock, and World on Fire S2 for the BBC.

The media and entertainment (M&E) segment recorded a 7% decrease in revenue, as expected, totalling £1.46bn.

That was primarily driven by a 7% decline in total advertising revenue (TAR), although digital advertising revenue - a component of digital revenue - saw a robust increase of 25%, reaching £283m by the end of September.

Total M&E non-advertising revenue decreased 3% despite notable growth in subscription revenue, offset by the expected decline in SDN revenue.

ITVX continued to perform well, with total digital revenues up 23% and total streaming hours ahead by 27% through September, with monthly active users meeting expectations.

The company noted that it maintained its ability to deliver mass reach for advertisers with programmes including Love Island, the Women’s Football World Cup, and the Rugby World Cup, drawing significant broadcast and streaming audiences.

Looking ahead, ITV Studios was expecting at least 5% organic revenue growth per year on average until 2026.

Despite challenges such as lower demand from free-to-air broadcasters and the impact of the US writers’ and actors’ strike, ITV anticipated a 3% growth in total studio revenue for 2023, following a 19% growth in 2022.

In the media and entertainment segment, ITV remained confident in delivering at least £750m of digital revenues by 2026, primarily driven by ITVX.

However, the advertising market presented challenges, and ITV anticipated an 8% decrease in total advertising revenue for 2023 compared to record-high levels in 2022, partly due to the FIFA World Cup’s positive impact.

As a result, the company was rephasing content into 2024, resulting in a £10m reduction in total content spend for the year.

ITV also noted the inclusion of the Media Bill in the King’s Speech, which aimed to update and reform the legal and regulatory framework for television, particularly that delivered online.

The firm said the bill should ensure that content from public service broadcasters, including ITV, was prominently featured on streaming platforms.

“ITV continues to make good strategic progress despite the challenging macro environment which is impacting the advertising market and also the demand for content from free-to-air broadcasters in the UK and internationally,” said chief executive officer Carolyn McCall.

“Studios and M&E digital revenues both grew strongly in the nine months to the end of September, more than offsetting the expected decline in linear advertising, delivering total group revenue growth of 1%.

“ITV Studios grew faster than the market, with 9% revenue growth, driven by its position as a scaled and diversified global production business.”

McCall said ITVX had a successful nine months, delivering 27% growth in total streaming hours, which, in turn, helped deliver 23% growth in digital revenue.

“Growth in digital advertising revenues continues to outperform other broadcasters, reflecting ITVX’s compelling viewer and advertising proposition.

“We are on track to deliver £15m of cost savings in 2023, as part of our previously announced £50 million cost saving target between 2023 and 2026.”

In addition, Carolyn McCall said the company would rephase £10m of content spend from 2023 into 2024.

“It is evident that our strategy of growing the Studios and M&E digital business is helping ITV to offset the current headwinds and we remain confident in delivering our 2026 targets, when we expect two-thirds of revenue to come from these growth drivers.”

At 0823 GMT, shares in ITV were down 5.65% at 61.89p.

Reporting by Josh White for Sharecast.com.