ITV profits are hit by falling advertising revenues

ITV’s boss believes the advertising market has recovered from last year, which she called the worst recession since the global financial crisis.

The profits of Britain’s largest free-to-air broadcaster dropped by over half, to £193 million before tax, in 2023. This was down from £501million the year prior, due mainly to a decline in traditional television advertising.

Dame Carolyn McCall’s conviction that the future holds great promise proved highly advantageous for investors. Its shares rose by 12.2 percent, or 7 1/2p to 68 1/2p yesterday, a new five-month high.

The income over the first quarter of 2024 should be higher than the same period in 2019 and last year, before the pandemic.

McCall, who is 62 years old, stated that “we’re definitely seeing a greater confidence in the advertising industry.” “Our first-quarter is up 3% year-on-year, and also pleasingly 3% higher than 2019, which was the final normalised quarter prior to Covid.”

She stated that the Euro 2024 football tournament for men, which starts in Germany in early June, will be “very beneficial” to ITV’s advertising revenues.

She said, “There’s no doubt that last year was a difficult advertising market.” “We have compensated a lot for that with our studios division, and digital growth. But at the same time, we expect this year’s to be better than it was last year.”

Michelle Keegan, Richard Armitage and Fool Me Once produced by ITV Production Division

ITV’s chief executive changed her tone dramatically from July when she could not give any assurances regarding the health of advertising market. She said that the advertising market was in the worst recession since the global economic crisis. We can’t say it’s okay because we haven’t figured out the details yet.

ITV reported a “severe drop” of 15% in linear advertising, as companies were hesitant due to the uncertainty around the global economy. Digital revenue, however, performed better. It increased by 19% to £490 Million.

The production division, which is responsible for dramas such as ITV’s M Bates vs. the Post Office or Netflix’s fool me once, saw revenues rise by 10% to a new record of £2.2 billion. This helped to offset advertising declines.

The production unit could be hit by an 80 million pound loss this year due to reduced spending by free-to air broadcasters, and the suspension of commissioning following the writer’s and actor’s strikes in the United States.

McCall stated that during the strikes, “no commissioning conversations were possible.” “Pitching, ideas, and discussions did not happen for quite a few months, which delayed commissioning decisions.”

ITV chief executive Carolyn McCall says that the repositioning is beginning to offset the decline in linear advertising revenue

McCall hopes that this “blip” will be offset by the growth of unscripted streaming in the coming year, following the success of the return of the Netflix competition The Squid Challenge.

ITV expects to generate at least £750m in digital revenues by the year 2026, after an “investment peak” year in 2023.

McCall stated that “Our studios division recorded its highest-ever revenues and profits, and ITVX in its first year delivered strong growth in digital revenue and viewing with investments on plan.”