ITV sees earnings plummet but highlights promise of ITVX

UK commercial broadcaster ITV has experienced a tough first half of the year, with ad revenues dropping and earnings plummeting. On the positive side, streaming platform ITVX is meeting its targets, with particular growth in light viewers.

The broadcaster reported top line sales of £1.639 billion (US$2.116 billion), down 2%, driven lower by an 11% drop in ad revenues in line with guidance. That figure marked an even more significant slide in traditional linear advertising, partially offset by a 24% rise in digital advertising revenues to £179 million. Advertising from the finance sector was down heavily, while travel and tourism provided a rare bright spot.

Production outfit ITV Studios also helped counter the slide, with sales up 8% to £1 billion, driven by its performance in the domestic UK market, the acquisition of Plimsoll Productions and currency benefits.

Group adjusted EBITA was down 52% at £152 million, in line with expectation. ITV said the drop reflects the challenging advertising market and its planned investment in streaming platform ITVX.

ITV said it was pleased with the performance of ITVX, on which it is banking its hopes of countering the decline in traditional advertising.

It expects to deliver a minimum of £750 million of digital revenues by 2026. Subscription revenues were up by 12% and paying subscribers now stand at 1.4 million.

Carolyn McCall

ITV also believes its second half will be strong thanks to the impact of the Women’s Football World Cup, the Rugby World Cup and reality franchise Big Brother.

The company also delivered £11 million of its planned £15 million in cost savings for this year by the end of the first half.

On the analyst call, CEO Carolyn McCall said ITV was prioritising expanding ITV Studios, which delivers non-cyclical revenues. She said its performance reflected demand for high-quality content.

She said that ITVX was performing well, delivering more viewing from ‘light viewers’ in particular.

“There is still more to roll out across ITVX and [addressable ad platform] Planet V,” said McCall, adding that the company was “confident” of meeting its revenue targets in digital.

Hailing ITV Studios’ £1 billion milestone, she said that group EBITA was down in part because of ITVX but noted that this was the year of peak investment in that platform.

On ITVX, McCall said that streaming hours were up to 737 million, as were monthly active users at 12.5 million. ITVX now has 22,000 hours content, including 6,000 hours of premium content.