UK public service broadcaster ITV released a Q3 trading update this morning, reporting that total external revenues for the first nine months of the year sat at £2.32 billion, down eight percent year-on-year. For Q3 specifically, total external revenues were down by nearly 20 percent, as phasing of deliveries and knock-on effects from last year’s Hollywood strikes impacted the broadcaster’s production arm ITV Studios.
Total ad revenues for Q3 were flat in Q3 (up by 0.5 percent year-on-year). Given stronger ad sales earlier in the year, fuelled in part by the men’s European Championships in the summer, ad revenues for the first nine months of 2024 was up six percent year-on-year, hitting £1.31 billion.
However the broadcaster cautioned that revenues in Q4 are likely to be down compared with last year. Partly this is due to unfavourable comparables – ITV held rights to last year’s men’s Rugby World Cup, which ran from September to the end of October and saw England progress to the final, giving ITV a boost in terms of valuable ad inventory. But ITV also says that it’s seen advertiser caution running into Q4 brought on by uncertainty around the budget. The IPA a few weeks ago reported that advertisers were putting budgets on ice in the run up to the budget – the question for ITV and others who have felt the impact is whether budgets are defrosting now the budget has been released.
Streaming revenues in line with audience growth
Both of the factors mentioned by ITV are short-term, so don’t necessarily point to the longer-term health of ITV’s ads business. And despite a projected fall in Q4, total ad revenues for 2024 are expected to be up by 2.5 percent year-on-year.
Managing the continued transition of audiences from traditional linear TV across to its streaming platform ITVX is obviously key to the future of ITV’s ads business. Streaming hours continue to grow, up 14 percent year-on-year in the first nine months of the year to 1.25 billion hours. And digital ad revenues rose pretty much in line with streaming’s growth, up by 15 percent year-on-year.
ITV’s future doesn’t lie solely in advertising though, and CEO Carolyn McCall said she remains confident in the growth potential for ITV Studios, despite a fall in revenues this year. ITV Studios is still projected to deliver an average of five percent organic growth per annum between 2021-2026.
The broadcaster has also been cutting costs in order to boost overall profitability, even as total revenues have fallen. “Our cost saving programme is progressing well and today we are announcing further cost savings in addition to the previously announced £40 million of incremental cost savings through restructuring, improved efficiency and simplifying ways of working,” said McCall. “Coupled with our strategic delivery and revenue outlook, this continues to give us the confidence that we will deliver an increase in group profit this year.”
These cost savings however will likely impact ITV’s ads business, with £10 million of these additional savings coming from reduced content spending.
