Home Money ITV shares fall as Hollywood strikes continue to damage studio arm

ITV shares fall as Hollywood strikes continue to damage studio arm

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Production: Toby Jones as Alan Bates in the ITV Studios series Mr Bates vs The Post Office
  • ITV was the second worst performer on the FTSE 250 index behind Wood Group
  • Turnover at ITV Studios plummeted by around £300m in the nine months to September

ITV actions fell on Thursday morning after the broadcaster revealed that sales at its production division had plunged by a fifth in the first nine months of the year.

Turnover at ITV Studios, maker of the hit show Mr Bates vs The Post Office, plummeted by almost £300m to £1.2bn in the nine months to September 30, as the unit continued to suffer from the impact of last year’s strikes in Hollywood.

Despite strong growth in digital advertising revenue, ITV’s total sales still declined 8 per cent to £2.7bn during the period.

Production: Toby Jones as Alan Bates in the ITV Studios series Mr Bates vs The Post Office

ITV shares were up 7.8 per cent, or 5.65 pence, falling to 66.7 pence at 11am, making it the second-worst performer on the FTSE 250 index behind oilfield services firm John Wood Group.

The company was hit hard by last year’s strikes in the US film and television industry, when actors and screenwriters walked out in a dispute over concerns over wages and artificial intelligence.

Production on many shows and movies was halted for more than six months before agreements were finalized with the major entertainment unions: SAG-AFTRA and the Writers’ Guild of America.

As a result, ITV believes that around £80 million in billing will be delayed from this year to 2025.

The London-based business has also been hit by weaker short-term demand from European free-to-air broadcasters.

But while ITV anticipates revenue in its production division will fall by a mid-single-digit percentage in 2024, the company expects to generate adjusted profits before the unpleasant problems in the range of 13 to 15 percent.

Carolyn McCall, its chief executive, said the segment “is off to an excellent start” in the fourth quarter, “which will ensure it achieves record profits in 2024.”

ITV plans to release “an unusually high number” of productions between October and December, including crime dramas Grace and Shetland, and adventure series Destination X, presented by Rob Brydon.

And while it forecast advertising sales will be 6 to 7 percent lower during the period due to last year’s Rugby World Cup and the uncertainty preceding the budget, the company said its advertising revenue for all the year will be around 2.5 percent higher.

McCall further announced that ITV would save a further £20m this year, split roughly equally between content and non-content costs.

“Together with our strategic delivery and revenue outlook, this continues to give us confidence that we will deliver an increase in group profits this year,” he said.

Richard Hunter, head of markets at Interactive Investor, said: “In investment terms, ITV remains a tall order, weighed down by the deep pockets of some of its competitors in the streaming space, as well as still feeling the after-effects of the previous strike of writers and actors in Hollywood.

He added: “Investors remain uneasy about the outlook, evidenced by an initial share price reaction that reflects broader and more obvious concerns around overall advertising revenue.”

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