ITV “mindful of uncertainty” as revenues rise 6%
November 9, 2022
ITV, the UK’s largest commercial broadcater, recorded revenues of £2.52 billion (€2.8bn) for the first nine months of 2022, a year-on-year increase of 6 per cent. Advertising revenues saw a 14 per cent drop in Q3, but with the World Cup on the horizon, ITV said it expected ad revenue to ease by 1-1.5 per cent for the year.
Carolyn McCall, ITV Chief Executive, said: “ITV has performed strongly delivering a 6 per cent increase in total revenue for the first nine months of the year, driven by double digit growth in both digital revenue and revenue from ITV Studios. ITV Studios continues to outperform the growing content market and will exceed 2019 revenues in 2022. It’s on track to deliver on all of its KPI targets and has a formidable slate to power it into 2023 as we further diversify the business by genre, geography and customer.”
“We are making good progress on our new, free, ad-funded streaming service ITVX, which will be rolled out across devices and platforms in the coming weeks with the full launch of new and exclusive content on 8th December, in time to reach millions of viewers who will come to ITV for the FIFA World Cup.”
“ITVX will supercharge our streaming business providing viewers with a content-rich destination rather than a catch up service and advertisers with valuable addressable audiences at scale. This will drive significant digital viewing and revenue growth, enabling ITV to deliver at least £750 million digital revenues by 2026.”
“While we remain mindful of the macroeconomic and geopolitical uncertainty there’s strong operational momentum across both our Studios and Media & Entertainment divisions, as we continue to build a resilient, diversified business that can take advantage of the global growth in the demand for quality content and the desire of advertisers for both mass reach and data-led addressable advertising, targeting millions of UK viewers,” she concluded.
Financial and operating performance for the nine months to September 30th as expected
- Total external revenue up 6 per cent at £2,523 million (2021: £2,381 million)
- Total non-advertising revenue up 13 per cent at £1,619 million (2021: £1,432 million), representing over 50 per cent of total revenue, as ITV continues to grow and diversify the business
ITV Studios
- Total ITV Studios revenue up 16 per cent at £1,387 million (2021: £1,193 million), growing ahead of the market
- ITV Studios delivered a wide range of new and returning programmes and formats in the UK and internationally, including A Spy Among Friends, Hell’s Kitchen USA, Let The Right One In and The Voice Germany
ITV Media & Entertainment (M&E)
- M&E revenue was down 2 per cent at £1,561 million (2021: £1,594 million), with total advertising revenue (TAR) down 2 per cent, broadly as expected, against tough comparatives. Against 2019 TAR was up 6 per cent
- Within this digital advertising revenue remains strong, up 13 per cent at £227 million to the end of September, compared to the same period in 2021
- Total M&E non-advertising revenue for the nine months to the end of September 2022 was down 3 per cent with good growth in subscription revenue offset by the expected decline in SDN revenue and interactive revenues against tough comparatives in 2021
- M&E’s KPIs demonstrate good strategic progress with total digital revenues up 15 per cent and total streaming hours broadly flat as ITV prioritises content on its own platforms to drive effective monetisation. Monetisable streaming hours on ITV Hub, ITV Hub+ and BritBox UK were up 10 per cent in the nine months to 30 September 2022. At the same time, ITV maintained its strength in delivering mass reach with 93 per cent of the top 1,000 commercially broadcast TV programmes and by maintaining its share of commercial viewing on its channels
Outlook
ITV Studios
- ITV Studios will exceed 2019 revenues in 2022 with an exciting pipeline of scripted and unscripted programmes as it further diversifies the business by genre, by geography and by customer and grow ahead of the market
- With its strong position in a growing market, ITV expects ITV Studios to deliver revenue growth in excess of its 5 per cent medium-term target in 2023
- ITV remains committed to delivering its ITV Studios adjusted EBITA margin guidance of 13 per cent to 15 per cent from 2023. As previously guided, ITV expects the margin to be at the lower end of the range in the shorter term as a result of the current inflation in the production market
Media & Entertainment
- ITVX, will be rolled out across devices and platforms in the coming weeks with the full launch of new and exclusive content on December 8th. It will launch with over 10,000 hours of free content.
- ITVX will enable ITV to continue to provide the largest free ad-funded premium streaming service in Europe by revenue
- ITV TAR for the full year 2022 is expected to be down between 1 per cent and 1.5 per cent on 2021’s record year and this will represent high single digit revenue growth compared to 2019. In Q4, ITV will broadcast the FIFA World Cup, which will benefit TAR in November and December. There however remains a high degree of economic uncertainty
In 2022, given the nature of ITV’s cost base and mitigations already in place, the broadcaster expects to be able to manage inflation. For 2023, continued higher rates of inflation will impact cost base although ITV says it is looking carefully at further mitigation measures.
Overall, despite the current macro and geopolitical uncertainty ITV says it is making significant strategic progress and is well positioned to deliver Phase 2 of the More Than TV strategy, through growing ITV Studios and delivering at least £750 million of digital revenues in M&E by 2026 and creating long-term value for shareholders.
ITV says its balance sheet is robust enabling it to invest in digital acceleration and deliver returns to shareholders in line with capital allocation policy.