ITV’s share price dropped on Thursday as the broadcaster tipped weakness in advertising sales to intensify.
At 73.1p per share the FTSE 250 business was 5.2% down in the session.
ITV — which produces global hits like Love Island and I’m A Celebrity Get Me Out Of Here — said that revenues fell 7% during the first quarter, to £776 million.
This was due to a 10% year on year drop in ad revenues. And it’s a result that pulled turnover at its Media and Entertainment division 9% lower to £495 million.
ITV expects the slump in advertising sales to worsen in the current quarter, too. A 12% decline from the same 2022 period is expected.
Mixed Results
On a brighter note, viewer demand for its ITVX streaming service launched in December remained impressive during quarter one. Total digital revenues rose 29% while streaming hours were up 49%.
Revenues at its ITV Studios division remained largely unchanged year on year at £457 million. The company said that new programme delivery in 2023 is “expected to be weighted to the second half.”
“In Line With Expectations”
ITV chief executive Carolyn McCall said that the company “continued to make significant strategic progress in the quarter and all parts of the business performed in line with expectations.”
Whilst advertising revenues were down, she noted that turnover was still better than the TV industry average. McCall also praised the performance of ITVX which she said had “sustained its strong launch.”
She said that “significant strategic momentum” has continued at ITV Studios, adding that “with a strong pipeline of content and committed revenues, it is on track to deliver mid-single digit revenue growth over the full year, ahead of the market.”
“Very Real Challenges”
Sophie Lund-Yates, analyst at Hargreaves Lansdown said that ITV’s double-digit drop in advertising revenues “reflects the very real challenges that come with relying on above-the-line spending during times of economic stagnation.”
She noted that the broadcaster “is throwing a lot at its digital transformation” and that digital revenues have proved more stable. However, she added that “this isn’t enough to stem losses elsewhere, showing how deeply rooted ITV still is in traditional broadcasting.”
Mark Crouch, analyst at social investing business eToro, described ITV’s latest update as “another mix of disappointment peppered with pockets of promise.”
He said that “the outlook for advertising revenues remains challenging and [they] are likely to remain depressed throughout the summer.” But he commented that viewer numbers are likely to pick up during the third quarter as Love Island returns and the Rugby World Cup kicks off.
Crouch added that the launch of the company’s ITVX streaming service is “encouraging,” noting that despite competition in the sector “there is clearly a level of demand for the service.”
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