Digital and Studios growth offsets advertising decline for ITV

UK broadcaster ITV’s shift to streaming continues with ITVX seeing total streamed hours increasing by 27% to the end of September and total digital advertising revenues up 25% to £283m.

Across ITV’s Media & Entertainment division, however, revenue dropped 7% to £1.459bn (down from £1.561bn in 2022) and the company said the “challenging” ad market means it expects total advertising revenue in 2023 to come in 8% down on last year.

Plans to secure digital revenues of £750m by 2026 remain in place, but ITV said it would be cutting its content spend this year by £10m in response to the soft ad market.

That means the broadcaster expects to spend around £1.29bn this year on programming, with the £10m pushed to 2024, but ITV said its balance sheet remained “robust” and able to invest in “strategic priorities”.

Carolyn McCall (Source: ITV)

ITV, which did not comment on M&A speculation linking it with a move for production outfit All3Media, said its total revenue was up 1% at £2.975bn.

ITV said revenues at its Studios arm rose 9% in the first nine months of 2023, helping to offset linear advertising declines of more than £100m ($122m) at parent broadcaster ITV over the same period.

Revenue from ITVS was up by $129m compared to this time last year at £1.516bn, with shows such as Fifteen Love for Amazon Prime, Peacock’s Love Island S5 and World On Fire S2 for the BBC picked put out as highlights.

ITV Studios (ITVS) expects revenues to grow by just 3% in 2023 – down from 19% in 2022 – as declining demand from free-to-air broadcasters hits the prolific production and distribution arm.

Carolyn McCall, ITV’s CEO, said the Q3 results showed the company was making “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.

“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%.

“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.”