ITV First-Half Earnings Impacted by Advertising Drop

Total external revenue at ITV was down 3 percent to £1.46 billion ($1.9 billion) in the first half of the year, as advertising dipped.

Adjusted earnings per share were down 9 percent and adjusted earnings before interest, taxes and amortization (EBITA) were down 8 percent to £403 million ($525 million).

ITV Studios saw a revenue gain of 7 percent for H1 to £697 million ($909 million). EBITA in the Studios segment was £110 million ($143 million), down 9 percent, impacted by an investment in its U.S. scripted business and a year-ago benefit from a deal in China.

Advertising revenue was down 8 percent to £769 million ($1 billion), with “continued economic and political uncertainty” cited.

Peter Bazalgette, ITV’s executive chairman, said: “ITV’s performance in the first six months of the year is very much as we anticipated and our guidance for the full year remains unchanged.

“Total external revenue was down 3 percent with the decline in NAR partly offset by continued good growth in non-advertising revenues, which is a clear indication that our strategy of rebalancing the business is working. We are confident in the underlying strength of the business as we continue to invest both organically and through acquisitions.

“ITV Studios total revenues grew 7 percent to £697 million including currency benefit. ITV Studios adjusted EBITA was down 9 percent at £110 million. This was impacted by our ongoing investment in our U.S. scripted business and the fact that the prior year includes the full benefit of the four-year license deal for The Voice of China. We have a very strong pipeline of new and returning drama and formats and we are building momentum in our U.S. scripted business. We continue to grow our global family of production companies and in H1 we further strengthened our international drama and format business with the acquisition of Line of Duty producer World Productions in the U.K., Tetra Media Studio in France and Elk Production in Sweden.

“The broadcast business remains robust despite the 8 percent decline in NAR caused by ongoing economic and political uncertainty with Broadcast & Online adjusted EBITA down 8 percent at £293 million. On-screen we are performing well. To the end of May, our ITV Family share of viewing grew although we ended the first half flat as June last year included the benefit of the Euros. ITV continues to deliver the mass audiences demanded by advertisers as well as delivering the key target demographics. ITV is the only channel to deliver a commercial audience over five million and Love Island demonstrates that young viewers engage in great TV content.

“Online, Pay & Interactive grew revenues by 5 percent to £112 million with double-digit growth across Online and Pay. Online viewing was again up strongly at 34 percent. We continue to grow our digital capabilities and invest in the ITV Hub, ITV Hub+, BritBox US, our SVOD joint venture with the BBC and Cirkus, our SVOD proposition in the Nordics and Germany.

“Looking ahead our guidance for 2017 remains unchanged. ITV Studios has already secured 85 percent of expected full-year revenues, over £100 million more than this time last year and is firmly on track to deliver good organic revenue growth. ITV Studios adjusted EBITA will be broadly flat year on year impacted by continued investment and the timing of program deliveries. We anticipate further good growth in Online, Pay & Interactive driven by VOD and Pay. We expect ITV Family NAR in Q3 to be down around 4 percent, again impacted by wider economic uncertainty and over the full year, we expect to outperform the TV advertising market.

“We see opportunities to continue to invest in growing an even stronger and more resilient business. The strength of our balance sheet and healthy cashflows allow us to do so while delivering sustainable returns to our shareholders.

“We are delighted that Carolyn McCall will be joining ITV as chief executive. Carolyn brings a strong track record in media, experience of an international operation, clear strategic acumen and a reputation for delivering value to shareholders. We look forward to her arrival on January 8, 2018.”