ITV is on course for a fall in advertising revenues this year after a 14 per cent drop in the third quarter, a sign of the challenges facing terrestrial television even as productions made for other broadcasters support its sales.
Despite an anticipated boost from the football World Cup, the UK’s largest commercial broadcaster said it expected ad revenue to ease by 1-1.5 per cent this year. There “remains a high degree of economic uncertainty”, ITV said in a trading statement on Wednesday.
The update, which sent shares in the FTSE 100 company down 5 per cent in early trading, comes at an important moment for the broadcaster, which plans to launch its new streaming service ITVX next month.
Alongside the ad revenue forecast, ITV cautioned that inflation was expected to put upward pressure on its costs in 2023 and that it was “looking carefully at further mitigation measures”.
Still, the figures also showed how its production arm ITV Studios, one of the largest producers of scripted and unscripted shows in Europe, is outshining other parts of the company.
ITV generated revenues of £2.52bn for the first nine months of 2022, a year-on-year increase of 6 per cent, as gains for Studios offset the ad decline.
The company said revenues from the production division – maker of hits including Love Island and I’m a Celebrity . . . Get Me Out of Here! – were on track to exceed pre-Covid levels this year.
ITV is actively reviewing the future of the division, including the possibility of selling a stake to help buoy its share price, the Financial Times reported last month.
Shares in ITV have dropped almost 40 per cent in 2022, bringing the sell-off over the past five years to more than half on concerns about its ability to compete with deep-pocketed US rivals such as Netflix.
Yet Carolyn McCall, chief executive, said on Wednesday that ITVX would “supercharge” the company’s streaming business.
ITVX is due to replace ITV Hub, which some viewers have criticised for being clunky. All ITV channels will be available to watch live through the platform, which will also feature exclusive releases and a back catalogue.
“While we remain mindful of the macroeconomic and geopolitical uncertainty, there’s strong operational momentum” across the group, McCall added.
ITV said the year-on-year advertising decline in the third quarter was explained by “tough comparatives” with the same period in 2021, when marketers increased expenditure to promote brands after Covid lockdowns.
Ad revenues declined 14 per cent in September, when some brands deferred or cancelled scheduled ad campaigns following the death of the Queen.
They also plunged 21 per cent in August and 9 per cent in July compared with the same period a year earlier, when the European football championship boosted audiences.