ITV: Shares drop after revenue plunges at production arm
A drop in revenue at ITV studios due to the ongoing effect of the US writers’ strike has pulled profit down, with cost savings and an increase in advertising revenue failing to offset the fall.
The company’s share price fell nearly eight per cent in early trades.
Group revenue in the first nine months of the year fell eight per cent to £2.7bn from £2.9bn in 2023.
Revenue at ITV Studios, which has produced Ludwig for the BBC and Rivals for Disney+, fell by 20 per cent in the year to date to £1.2bn.
ITV said the drop was due to the phasing of deliveries—with more shows slated for the fourth quarter than the third—and the 2023 US writers’ and actors’ strike.
Revenue is expected to decline mid-single digits over the full year.
However, the broadcaster said ITV Studios was nonetheless “on track” to deliver record adjusted earnings before interest, tax and amortisation in the full year as efficiency gains and a “significant” fourth-quarter delivery schedule push earnings up.
Productions in the fourth quarter include Shetland for the BBC, Grace S5 for ITV, and The Forsytes for PBS Masterpiece.
ITV’s advertising revenue set to grow
Total advertising revenue was flat in the third quarter, although ITV expected full-year revenue to be up 2.5 per cent. The broadcaster said fourth-quarter advertising bookings were impacted by the uncertainty in the lead up to the UK budget.
ITV will aim for £20m of net cost savings in 2024, £10m of which will be a reduction in content costs and £10m of which will be the early delivery of non-content savings planned for 2025. The savings should ensure an increase in group profit this year, it said.
Chief executive Carolyn McCall said: “ITV’s good strategic progress has continued in the first nine months of 2024 driven by strong execution and industry leading creativity.
“ITV Studios is performing well despite the expected impact of both the writer’s strike and a softer market from free-to-air broadcasters. ITV Studios has had an excellent start to the fourth quarter, in line with expectations, which will ensure it achieves record profits in 2024.
“ITVX continued its strong performance, delivering double-digit growth in streaming hours and digital revenues. ITV maintained its unique position in linear television through the quality and breadth of its schedule, and ITV1 was voted Channel of the Year at the Edinburgh TV Awards.
“Our cost saving programme is progressing well and today we are announcing further cost savings in addition to the previously announced £40m of incremental cost savings through restructuring, improved efficiency and simplifying ways of working.”