ITV will take advantage of Hollywood’s writers strike to fill up empty schedules in the US if the impasse continues through the fall.
The group said that advertising revenue had dropped by more than 10% in the last six months, as companies cut back on marketing expenditures. This resulted in a sharp drop in pre-tax profit.
Chief executive Dame Carolyn McCall said that the media group is experiencing the “worst recession in advertising since the global financial crises”.
The growth of its studio production division, which produces programmes like Love Island, partially offset the decline in advertising revenue for the first half of the year.
ITV may benefit from the strikes of Hollywood writers, if US broadcasters are forced to fill their schedules this year with pre-produced programmes.
ITV Studios boss Julian Bellamy stated that the broadcaster has a TV catalogue of over 90,000 hours. “So we’re in a great position to take full advantage of any opportunity”. McCall said: “We’ll talk about whether we can fill their schedules.” ITV will not charge premiums for content sold to streamers in order to fill schedules.
The strike could also affect ITV’s US-based scripted television production business. Bellamy stated that “if the strikes continue into autumn, it could start to impact production”.
The British broadcaster reported that total external revenues for the first half of 2023 dropped by 2 percent to £1.6bn. Growth in the studio production business offset the 11% drop in total advertising revenues for the six-month period.
The decline in traditional TV revenues caused the pre-tax profit to fall from £219mn during the first half 2022 to £45mn.
ITV Studios’ revenue increased by 8 per cent, to £1bn. However, traditional linear TV and digital television businesses in the Media and Entertainment division saw revenues fall by 9 per cent to a total of £964mn.
The company also invested in ITVX. Spending on this new TV streaming service is expected to peak during the year.
In recent weeks, advertising groups have warned about , a slowdown, in the sector. This is due to lower spending from tech companies, which affects ad supported broadcasters like ITV.
While advertising on linear TV channels has been struggling, digital advertising across the streaming service has grown by 24 percent.
McCall stated that ITV’s strategic transformation, which focused on expanding non-linear television operations in studios as well as streaming, had helped to offset the weakness of the UK advertising markets.
She said that advertisers will be expected to create new campaigns to attract audiences to the Women’s World Cup Rugby World Cup as well as the return of Big Brother.
ITV announced this month, despite its focus on increasing revenues for studios, that it has pulled out of negotiations to purchase All3Media. This production company is behind Gogglebox and is owned by Warner Bros Discovery, Liberty Global which also owns ITV.
Analysts say that a deal with All3Media could have also given the market an idea of the value of the studios, as they believe it is currently undervalued. McCall stated that ITV, like many other consumer-facing companies, was “frustrated by its share prices”.