In Q2 this year, British broadcaster ITV quietly passed a significant milestone. Revenues from its production arm, ITV Studios, overtook revenues from its media and entertainment segment, the majority of which comes from advertising.
The weakness of the TV ad market was one contributing factor. Total ad revenues for ITV were down 11 percent year-on-year, leading to an overall drop in media and entertainment income. But the shift in balance also represents a conscious refocusing of ITV’s efforts. ITV’s presentation accompanying the results spoke of “repositioning ITV towards the growth drivers of ITV Studios and the M&E digital business”.
ITV is not alone in this restructuring. Across Europe, broadcasters have been rethinking exactly where their revenues are coming from in the face of stagnating TV ad spend. By comparing the makeup of broadcasters’ total revenues from five years ago with their current state, we can build a picture of how this transformation is playing out across the continent.
ITV
Five years ago, while ITV’s media and entertainment segment (which covers everything outside of ITV Studios) made up the majority of ITV’s business, advertising was already less than half of total income. Direct-to-consumer (which didn’t include any ad revenues from streaming services) was a small but growing segment. And ITV wasn’t yet separating out digital ad revenues from linear ad revenues in its financial reports.
In 2023, the picture has shifted. ITV Studios now makes up just over half of ITV’s revenues. ITV now reports digital ads separately from linear, and while digital ad revenues have grown, they’re still much smaller than linear. While it’s a growing segment, the growth hasn’t been quick enough to prevent an overall drop in ad income.
The relative decline of the ‘subscriptions’ segment (the equivalent of 2018’s direct-to-consumer segment) is also interesting. Back in 2018 ITV had high hopes for D2C revenues, aiming for at least £100 million in annual D2C revenues by 2021. Changes in how ITV reports have obscured exactly how this has progressed, since the D2C segment included more than just subscription revenues. Nonetheless, subscriptions to services like Hub+ and BritBox were a major component. The fact that total subscription revenues were only £29 million for the first half of the year suggests this strategy hasn’t played out as hoped.
RTL
RTL’s evolution over the past five years in some ways mirrors ITV’s. Like ITV, linear ad revenues (RTL doesn’t include digital ad revenues in its TV advertising segment) have seen a significant fall in RTL’s revenue mix. Meanwhile content, which covers RTL’s production income streams, has grown substantially.
What’s particularly interesting about RTL is that digital revenues have actually fallen as a percentage of total revenues – despite growth of RTL’s streaming business being a major priority for the company.
A couple of factors explain this fall. The sale of supply-side platform SpotX to Magnite for will have had a significant effect, as well as other adjustments to revenue streams which RTL classes as digital. And streaming revenues, a major part of RTL’s digital strategy, are concentrated within the ‘distribution’ segment – the 2018 analogue of this being the ‘platform’ segment. This segment has grown significantly. And with streaming revenues a major priority for RTL, the company will hope to grow this slice of the pie significantly in the next few years.
TF1
In contrast to ITV and RTL, advertising as a percentage of total revenues looks fairly changed in the first half of this year compared with five years ago. And even the internal weight of total ad revenues doesn’t appear to have changed much. In 2018, TF1 said that linear TV ad revenues made up around 90.3 percent of total ad revenues. Meanwhile in the first half of 2023, ad revenues from streaming service MYTF1 amounted to under seven percent of total ad revenues, suggesting that linear TV still contributes the vast majority (though the nature of some of these TV ad revenues will have changed, as TF1’s addressable linear ads business grows.
The major change apparent from the above graphs is simply the change in how TF1 reports – breaking out its production arm Newen Studios from its studios and entertainment section, suggesting its increasing importance to the company.
ProSiebenSat.1
As is the case for TF1, advertising remains the single biggest contributor to ProSiebenSat.1’s overall revenues, despite the slow TV ad market in the first half of this year. And while advertising’s slice of the pie is smaller than it was for 2018, this fall hasn’t been as steep as it has been for some others.
Outside of advertising, there’s been significant reworking of ProSieben’s revenue mix. While content has been a key source of strength for several other European broadcasters, content revenues have shrunk for the German business due in large part to its sale of Red Arrow Studios’ US production arm (which generated €218 million in 2021).
Meanwhile dating and video, an entirely new segment, accounts for a small but significant proportion of ProSieben’s total income.
MFEMediaForEurope (previously Mediaset)
Of all European broadcasters mentioned here, MFEMediaForEurope’s revenue pie chart is the simplest. The company doesn’t give much information on the internal makeup of its advertising and non-advertising revenue streams.
All we can really see here is that MFEMediaForEurope was and is very reliant on ad revenues. While the non-advertising slice of the pie has grown, this is mostly down to a decline in ad revenues (since H1 non-ad revenues this year haven’t grown much proportional to their 2018 full-year levels).
Viaplay
On the other end of the spectrum, Viaplay’s revenue makeup looks drastically different in the first half of this year compared with 2023.
Ad revenues are a smaller portion of Viaplay’s total revenues now than they were in 2018, but Viaplay has always been less reliant on ads than other broadcasters listed here. But the major change has been the major focus on its Viaplay streaming business (which the whole company, previously known as NENT, was rebranded after last year). Viaplay now makes up the majority of the company’s revenues (which has eaten into the ‘linear subscriptions and other’ segment, due to consumer relationships moving over to Viaplay.
Meanwhile NENT Studios, previously its own segment, has disappeared from the picture due to a series of sales. While the unit still exists as Viaplay Studios, it now sits within the ‘other’ bit of ‘linear subscriptions and other’.
Atresmedia
While you might expect broadcasters to start breaking out digital ad revenues separately from other TV revenues as this segment grows, Atresmedia has gone in the opposite direction. But we can see an overall fall in ad income as a percentage of total revenues – total ad revenues now make up roughly the same proportion of Atresmedia’s earnings as TV ad revenues alone did back in 2018.
Meanwhile content production and distribution has seen significant growth, though as an overall percentage of the Spanish broadcaster’s revenues, it’s still relatively small. And all in all, Atresmedia is still heavily reliant on advertising, despite having a number of other revenue streams.
