ITV warns of ad slump but is on track with new streaming brand launch

ITV has warned that it expects an advertising slump over the coming months because of “macroeconomic and geopolitical uncertainty” and the absence of a major commercial event such as last year’s European football championship.

The broadcaster lauded a “robust” start to the year, having grown TV and digital advertising revenues by a healthy 16% year-on-year to £468m in the first three months.

It remains on track to launch its free, ad-funded service ITVX – its new streaming master brand that will replace the ITV Hub and paid-for ITV Hub+ brands and also draw on content from BritBox – in the final quarter.

ITV reiterated that the streaming service would help it achieve a goal of £750m in digital ad income annually by 2026, reducing its dependence on traditional TV advertising.

The broadcaster grew total external revenues – including income from its in-house ITV Studios operation, which makes shows including Coronation Street, Hell’s Kitchen and Love Island – by 18% to £834m for the first quarter.

However, the company said it narrowly missed its forecast of 10% total advertising growth for April, hitting 9% instead. May is expected to be down 8% year-on-year, with June off 15%, with the second quarter overall dropping 6% year-on-year.

ITV slightly beat the consensus forecast from analysts of an 8% ad slump in the second quarter.

The broadcaster said the strong start to the year means that overall ad revenue in the first half will be up 5% year- on-year, and 7% compared with the same period in pre-pandemic 2019.

“As expected, advertising comparatives get much tougher in the second quarter and third quarter against the Euro football championships in 2021 and we are mindful of the macroeconomic and geopolitical uncertainty,” the company said.

ITV’s share price, which is down more than 40% over the past year, crept up 1% after the release of the trading update.

The broadcaster said its total streaming hours dropped 7%, or 20m hours, to 247m in the first quarter. It added that while streaming on its platforms grew 8% in the quarter, total streaming had been affected by a decision to make fewer of its shows available on other platforms.

“ITV has taken the strategic decision to reduce the availability of pre-transmission drama drops and box sets outside of its own streaming services, such as on Sky and Virgin, where we cannot serve and monetise dynamic advertising,” the company said.

“Therefore, this decision does not reduce existing revenues. Over time and with the launch of ITVX we anticipate that we will see this viewing move to ITV’s streaming services and be more effectively monetised.”

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