ITV’s advertising rebound is offset by Hollywood strike

A rebound in advertising failed to prevent a fall in revenue at ITV’s studio arm as the broadcaster continues to feel the effects of the Hollywood actors’ and writers’ strike.
The FTSE 250 media company said it was stripping £10 million from content costs and £10 million by bringing forward cost cutting planned for next year, as sales fell by 8 per cent to £2.7 billion in the first nine months of the year.
The industrial action in the United States and lower demand from European broadcasters helped to pull down revenue from the Studios division by 20 per cent to £1.2 billion in the third quarter, from £1.5 billion in 2023.
Around £80 million of revenue has been delayed from this year and pushed into 2025 because of the strikes.
Shares in Britain’s biggest free-to-air commercial broadcaster were down 7½p, or 10.5 per cent, at 64¾p by mid-afternoon in London.
Total advertising sales rose by 6 per cent to £1.3 billion, and the business expects the figure for the year to be up by about 2.5 per cent. However, the final quarter of this year will compare unfavourably by up to 7 per cent with the same period in 2023, when the Rugby World Cup gave the broadcaster its biggest audiences of the year.
ITV said uncertainty about the budget hit advertising bookings in the last three months of the year. It forecast that total revenue will fall by around 5 per cent for the year, while Studios will deliver a “record” adjusted earnings before deductions.
Dame Carolyn McCall, the chief executive, 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 writers’ 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. Studios has great creative and commercial momentum as demonstrated in the last few weeks with shows including Rivals for Disney+ and Ludwig for the BBC and is on track to deliver good revenue growth in 2025 and 2026.”
The company said there would be “an unusually high number of productions” in the fourth quarter of this year, including The Better Sister for Amazon Prime Video and Hell’s Kitchen for Fox in the US, while in Britain it is delivering Shetland for the BBC, Grace season five for ITV and Destination X for the BBC and NBC, as well as a new adaptation of The Forsyte Saga for PBS Masterpiece.
McCall added: “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.
“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.”
ITVX, the company’s on demand platform which it launched in December 2022, reported a 14 per cent growth in streaming hours and 15 per cent growth in digital advertising revenue in the nine months to the end of September.
Roddy Davidson, equity analyst at Shore Capital, the broker, said ITV’s current trading is “modest in the context of its financial characteristics — strong cash generation, modest leverage — the growth potential offered by its digital and production operations and its strategic value.”