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Shares in ITV dropped to their lowest level in more than a year on Wednesday after the broadcaster warned that the Hollywood strikes would hit its studio revenues next year.
The UK-listed media group said it would trim its spending on content this year after pointing to the “challenging” economic backdrop that has continued to undermine both the advertising market and demand for content from broadcasters.
ITV said on Thursday that total revenue was up 1 per cent at £2.98bn in the first nine months of the year, with growth in its studio and digital revenues more than offsetting the decline in linear advertising revenue.
Revenue at its ITV Studios production business — which makes programmes such as Love Island — was up 9 per cent at £1.52bn over the same period. But revenue from television channels fell 7 per cent to £1.46bn as total advertising revenue dropped 7 per cent. That led to a decision by the company to delay about £10mn in spending in its £1.29bn content budget.
The broadcaster said it expected ITV Studios to increase revenues at least 5 per cent every year on average up to 2026 but that in the shorter term “the global content market has been impacted by lower demand from free-to-air broadcasters, reflecting the challenging advertising environment, as well as the US writers’ and actors’ strike”. It said that the latter was expected to delay some revenues from 2024 into 2025.
Shares in ITV dropped almost 7 per cent on Thursday morning, taking shares to their lowest level since October 2022 at about 61p.
Carolyn McCall, ITV chief executive, said the company had made “good strategic progress despite the challenging macro environment, which is impacting the advertising market and also the demand for content from free-to-air broadcasters”.
She said ITV Studios “grew faster than the market . . . driven by its position as a scaled and diversified global production business”. ITV has said that it is monitoring the sale of a rival UK studio business, Warner and Liberty Global’s All3Media, which has attracted interest from several bidders, including Peter Chernin’s studio North Road.
The group is stripping out £15mn of cost savings in 2023, with £10mn of content spend now pushed back from 2023 into 2024.
“Our strategy of growing the studios and [media] digital business is helping ITV to offset the current headwinds,” McCall added.
