ITV profits slump 61% amid sluggish advertising market

ITV’s profits more than halved last year due to a challenging advertising market and investment in its streaming service, ITVX.

The broadcaster revealed its pre-tax profits plummeted 61 per cent to £193m in 2023 as companies became increasingly cautious about spending money on TV adverts amid difficult times. economic conditions.

Traditional “linear” advertising revenue fell 15 percent, with trading towards the end of 2023 also hit by strong comparisons to the previous year’s FIFA World Cup.

However, digital sales rose 19 per cent to £490m following a rise in the number of people using ITVX, which launched in December 2022.

ITV said the service’s total monthly active users grew by almost 20 percent to 12.5 million in its first full calendar year, while broadcast hours rose by more than a quarter to 1.5 billion hours.

However, the company’s significant investment in ITVX, including original programming, contributed to the decline in its overall profits.

The decline in profits overshadowed the excellent performance of the company’s television production arm, which achieved record revenue and profits thanks to multiple successful new launches.

These included Mr Bates vs The Post Office, a miniseries credited with reviving interest in a national scandal involving more than 900 subpostmasters unfairly prosecuted for fraud, theft and false accounting.

ITV also made Fool Me Once, now one of the top ten most-watched English dramas on Netflix, and reality competition show Squid Game: The Challenge, based on the South Korean dystopian series.

The FTSE 100 firm said its studies division was on track to grow organic revenue by 5 per cent annually from 2021 to 2026.

But he warned that trade this year would be affected by recent strikes in the U.S. film and television industry and lower demand from free-to-air broadcasters in Europe, which are delaying spending until the advertising market recovers.

Carolyn McCall, chief executive of ITV, commented: ‘2023 has been the peak investment year for streaming and the successful execution of our strategy and the efficiencies achieved to date have made ITV stronger.

‘ITV has a leading, large-scale global studio business, a high-growth streaming service and a cash-generating linear advertising business.

“This ensures we are well positioned to grow profits going forward as we continue to drive material efficiencies, invest behind our strategic priorities and deliver returns to shareholders.”

Last week, ITV announced that the net proceeds from the £255m sale of its stake in BritBox International to BBC Studios would go towards funding a share buyback.

He said the transaction reflected a strategy of focusing on “supercharging” ITVX and growing its television production operations.

Russ Mould, investment director at AJ Bell, said: ‘ITV’s recent decision to exit its BritBox International joint venture with the BBC looks like an increasingly smart move given the strong performance of its ITVX streaming service.

“It makes no sense for the company to dilute its resources and focus when it needs to put all its efforts into making ITVX a success.”

ITV actions They rose 5.5 per cent to 64.3p on Thursday morning, although they are still down around 26 per cent in the last 12 months.