British TV giant ITV on Thursday reported a 10 percent drop in advertising revenue for the first quarter of 2023 amid macroeconomic clouds, slightly less pronounced than its forecast for a fall of around 11 percent, with the current forecast for the second quarter of a decline of 12 percent.
The company, led by CEO Carolyn McCall, said ad revenue fell 12 percent in April, forecasting May at about 10 percent and June at about 14 percent.
ITV reported a 7 per cent drop in total outside sales in the first quarter for the January-March period to £776 million ($979 million) and detailed results across major business units.
Quarterly revenue for its production arm ITV Studios remained virtually unchanged at £457 million ($577 million). Shows delivered in the last period in the UK and internationally included Big beasts for Apple TV+, Sky’s DjangoITVXs Nolly And Strange eye for Netflix.
Meanwhile, ITV’s main media and entertainment unit saw revenue fall 9 percent to £495 million ($625 million), driven by the drop in advertising, but digital revenue in the unit rose 29 percent to £106 million ($134 million). million).
“Total ad revenue in the first quarter was down 10 percent, as expected and better than the broader TV advertising market,” McCall said. ITV forecasts digital ad revenue to grow by more than 20 per cent in the current second quarter despite the overall projected ad decline of 12 per cent over the period, highlighting: “The outlook for total ad revenue is, as expected, , challenging given the current macroeconomic environment.”
McCall said Thursday that “we’re looking forward to the third quarter with Love Island and the Rugby World Cup will attract huge broadcast and streaming audiences.”
The company also reiterated on Thursday that ITV Studios’ financial performance in 2023 will be determined by the second half. “ITV Studios continues to demonstrate significant strategic momentum,” said McCall. “With a strong content pipeline and committed revenues, we are on track to deliver full-year mid-single-digit revenue growth ahead of the market. This follows record sales in the fourth quarter of 2022 and with the phasing of deliveries expected to be weighted to the second half of 2023.”
Earlier in the year, the company had said: “With ITV’s strong foothold in a growing market, we expect ITV Studios to deliver average sales growth of at least 5 per cent per annum through 2026 and to grow faster than the market.”
ITVX, the company’s ad-supported streaming service that launched late last year, also got a shoutout from CEO McCall. “ITVX has maintained its strong launch, with a 49 percent increase in streaming hours and a 29 percent growth in digital revenue in the quarter,” she said. “Exclusive, like Nolly And The Twelve attracted new viewers, 80 per cent of whom went on to explore other content on ITVX. In addition, live simulcast coverage of our biggest shows and sporting events, including Love Island and the FA Cup (football tournament) attracted a large streaming audience.”
ITV management has committed to a ‘digital first’ content strategy as part of McCall’s ‘More Than TV’ strategy. The streaming push is part of a target to double digital revenue to £750 million ($1 billion) by 2026.
McCall expressed confidence in her team’s progress, saying: “ITV is successfully executing Phase 2 of its More Than TV strategy, despite the current challenging macro and geopolitical environment, as we continue to meet the growing demand for content globally and the desire of advertisers to ensure both massive reach and targeted digital audiences.”
