ITV sees profits plummet on advertising downturn

UK commercial broadcaster ITV saw its profits more halve last year amid a sharp downturn in the advertising market in the country, but pointed to growing revenues from its Studios business and a strong performance in digital from streaming platform ITVX as pointing the way ahead.

Total revenue for the year was down 2% and total external revenue was down 3% to £3,62 billion. The broadcaster pointed to record revenues in ITV Studios, up 4%, and 19% growth in digital revenues as helping to offset a 15% decline in linear advertising.

Group adjusted EBITA was down 32% to £489 million, hit both by the decline in the ad market and investment in ITVX.

The broadcaster said its 8% decline in total advertising revenue in 2023 in fact outperformed the overall TV ad market.

ITVX saw monthly active users grow by 19%, and total streaming hours increased by 26%. Digital revenues totaled £490 million, up 19%, with digital ad revenues up 21%.

Peak investment in ITVX

Further on the upside, ITV pointed to 2023 being the year of peak investment in ITVX and said it was on track to deliver £750 million in digital revenues by 2026.

However, the company also expects 2024 revenues to be hit by the onward impact of last year’s writers’ and actors’ strikes, which which will delay around £80 million of revenue from 2024 to 2025, as well as weaker demand from free-to-air broadcasters in Europe.

The broadcaster said that ITVX’s performance had shown it could grow viewing while spending less on content, and it plans to reduce its content spend this year to £1.275 billion.

Carolyn McCall (Source: ITV)

“2023 was a challenging year but we delivered a robust financial and operational performance and we’ve made significant progress against all three strategic pillars. The actions we’ve taken to focus ITV on growth in Studios and digital advertising has enabled us to navigate through the significant economic headwinds which contributed to a severe slowdown in the linear TV advertising market,” said CEO Carolyn McCall on the company’s earnings call.

“Now the headwinds coincided with the peak investment year for ITVX. ITV studios and strong digital advertising growth substantially offset the 15% decline in linear advertising with total revenue down only 2%. ITV studios reported growth ahead of the market and delivered record revenues and profits and ITVX had a hugely successful launch here with very strong digital revenues driven by a step change in viewing showing, I think, that the strategy is demonstrably working.”

She said that ITV was on track to deliver 2026 KPI targets, but “to derisk linear revenues from both cyclical and structural headwinds” the company is initiating a new multiyear strategic restructuring and efficiency programme across the group.