REG - ITV PLC - ITV plc Q1 Trading Update
11/05/2022 07:00
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RNS Number : 0184L ITV PLC 11 May 2022
ITV plc Q1 Trading Update for the 3 months to 31 March 2022
Carolyn McCall, ITV Chief Executive, said:
"ITV has achieved strong Q1 revenues driven by a robust operational and
financial performance with 23% revenue growth in ITV Studios, a 16% increase
in total advertising revenue as expected and 24% increase in digital revenues.
"We are focused on the three core drivers of value for ITV. We are growing
Studios with a strong quarter and an exciting pipeline of scripted and
unscripted programmes as we further diversify the business by genre, by
geography and by customer and grow ahead of the market. In Media and
Entertainment, we maintained the strength of our linear business where we
secured 93% of the largest commercial audiences. And we are making good
progress in our goal to supercharge streaming by increasing our hours of
content by 50% in the quarter to 6,000 hours and making available the majority
of scripted programmes in full for streaming at the same time as the initial
broadcast.
"All of this provides a solid foundation for ITVX - our free, ad-funded
streaming service - which is on track for launch in Q4 and we remain confident
that we will deliver at least £750 million of digital revenue by 2026.
"We welcome the Government's recognition in the Media White Paper of the huge
value the Public Service Broadcasters (PSBs) deliver to the UK and their
determination to reform the legal and regulatory framework to ensure PSBs,
including ITV, have prominence, inclusion and fair value for their content and
therefore are able to continue to thrive in the future."
Continued strong financial performance for the three months to 31 March
● Total external revenue was up 18% at £834 million (2021: £709
million)
● Total ITV Studios revenue was up 23% at £458 million (2021: £373
million)
● M&E revenue was up 13% at £545 million (2021: £483 million),
with total advertising revenue (TAR) up 16%
Operational update
ITV Studios:
● Q1 was particularly strong with a wide range of new and returning
programmes and formats delivered in the UK and internationally, including a
number of programmes delayed from Q4 2021. Deliveries in Q1 included:
○ Holding, Why Didn't They Ask Evans, Noughts and Crosses S2, Murder
in Provence and Physical S2
Media and Entertainment:
● Total advertising revenue (TAR) for 2022 has started well
○ TAR was up 16% for the three months to the end of March 2022 with
good demand across the majority of advertising sectors. January was up 15%,
February up 20% and March up 15% compared to the same period in 2021
○ Within this digital advertising revenue remains very strong, up 27%
to the end of March compared to the same period in 2021
● Total non-advertising revenue for Q1 was down marginally with good
growth in subscription revenue offset by the expected decline in SDN revenue
and interactive revenues against tough comparatives in 2021
Digital Acceleration: Delivering Phase Two of our More Than TV strategy
ITV Studios:
● ITV Studios has an exciting pipeline of scripted and unscripted
programmes in Q2 and the remainder of the year as we further diversify the
business by genre, by geography and by customer and grow ahead of the market
○ Scripted is growing strongly with programmes such as Snowpiercer
(USA), The Outlaws (UK), The Suspect (UK), Django (Italy) and Summertime
(Italy)
○ Unscripted programmes expected to be delivered this year include
Hell's Kitchen USA, The Chase USA, as well as Love Island in the UK, USA,
Australia, Netherlands, Spain and Germany
● Revenues from streaming platforms globally continue to grow with
development deals or commissions with most of the major streaming platforms
including Inganno and One Piece for Netflix, Love Island USA for Peacock and a
Benjamin Franklin drama for AppleTV+
● Our new labels set up through our recent talent deals have an
impressive slate of programmes including Night in Paradise from Windlight
Pictures for Starzplay, Nolly from Quay Street Productions for ITV and
Litvinenko from Patrick Spence for ITV and Viaplay
● We continue to focus on advancing our digital innovations in ITV
Studios to drive efficiencies and create a more sustainable way of working.
This includes remote and cloud based editing and virtual production sets
Media and Entertainment:
Progress in the delivery of ITVX:
● The launch of ITVX is on track for Q4 2022
● Continuing to strengthen and evolve ITV's streaming experience
with
○ Significant increase in the content available for streaming with
6,000 hours of content, up from 4,000 at the end of December 2021
○ Warner content is now available including titles such as The Sex
Lives of College Girls, The OC and One Tree Hill
○ Majority of scripted programmes are available for streaming in full
at the same time as initial broadcast. This has helped drive the best ever
start to the year for drama viewing online with 125 million streams for the
four months to the end of April, up 8% year on year
○ Product developments including rolling out new features such as
start again, search improvements to improve accuracy, increased
personalisation such as onward journey recommendations and design enhancements
○ Successfully working with distribution partners to ensure that ITVX
will be widely available at launch
● BritBox UK has rolled out an exciting line up of new original
content, including Why Didn't They Ask Evans and Murder in Provence, growing
subscriptions since the beginning of the year
● Planet V, ITV's leading addressable advertising platform, now has
in excess of 1,300 users (up from over 1,000 at 31st December 2021) and in Q1
attracted almost 50 new digital-only advertisers to ITV
Key performance indicators
● Total digital revenues grew 24% in Q1 with strong growth in digital
advertising revenues up 27% and subscription revenues up 37%
● Total streaming hours on ITV Hub, ITV Hub+ and BritBox UK were up 8%
in Q1. 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. 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. The transitional impact of this decision has been the overriding
driver of a 7% reduction in total streaming hours in the quarter, across all
platforms
● We increased our share of linear viewing with ITV's share of
commercial viewing (SOCV) for the three months to the end of March of 34.5%
(2021: 34.1%)
● ITV continues to deliver the majority of commercial mass audiences
with 93% share of top 1,000 commercial broadcast TV programmes in Q1 (2021:
92%)
● BritBox International is delivering good growth in subscriptions in
line with our plan across the US, Canada, Australia and South Africa and the
recent successful launch in the Nordics including Sweden, Denmark, Norway and
Finland
Driving positive change through our social purpose priorities
● ITV's Concert for Ukraine raised £13.4m for the Disasters
Emergency Committee's appeal for Ukraine
● Launched two successful campaigns in the quarter - Eat Them to
Defeat Them to promote healthy eating and the ITV2 partnership with CALM to
support younger people's mental health
Outlook
● ITV Studios is performing strongly and is on plan for the year,
taking advantage of the strong global demand for content
● As expected, advertising comparatives get much tougher in Q2 and
Q3 against the Euro Football championships in 2021 and we are mindful of the
macroeconomic and geopolitical uncertainty
○ Q2 2022 TAR, as expected, is forecast to be down around 6% against
strong comparatives in Q2 2021 when TAR was up 89% compared to 2020. H1 is
expected to be up around 5% compared to the same period in 2021
○ April 2022 TAR was up 9% and we forecast May to be down around 8%
and June to be down around 15% compared to the same period in 2021
○ Compared to 2019, Q1 TAR was up 12%, Q2 is forecast to be up around
2% and H1 TAR is forecast to be up around 7%
● ITV is well positioned to deliver ITVX, as a free, ad-funded
streaming service, with our deep relationships with advertisers, strong demand
for Planet V and a significant track record for growing digital advertising
revenues. We remain confident that this will enable us to deliver at least
£750 million of digital revenues by 2026
● We are on track to deliver our previously announced £17 million
cost saving target for 2022
● The 1 January 2020 actuarial valuation of the main section of the
ITV Pension Scheme was agreed during the period, with the documentation
currently being finalised. On the basis agreed with the Trustee, the deficit
as at 1 January 2020 amounted to £252 million, down from £489 million at 1
January 2017. The Group has revised the existing deficit reduction
contribution plan in order to eliminate the deficit of £252 million (see
notes to editors for further details)
● ITV's strong balance sheet and free cash flow generation enables
it to fund investments to deliver its digital acceleration and returns to
shareholders
NOTES TO EDITORS
1. Unless otherwise stated, all financial and operating figures refer to the
3 months ended 31 March 2022, with growth compared to the same period in 2021.
2. Group financial performance
Revenue for 3 months to 31 March (£m) 2022 2021 Change Change
£m %
Media and Entertainment 545 483 62 13%
ITV Studios 458 373 85 23%
Total revenue 1,003 856 147 17%
Internal supply (169) (147) (22) 15%
Total external revenue 834 709 125 18%
Note: 2021 comparatives have been restated to reflect the reclassification
of gaming, live events and merchandising revenues from the M&E business to
Studios. The impact is a £1 million transfer from M&E to Studios.
Revenue for 3 months to 31 March (£m) 2022 2021 Change Change
£m %
Total advertising revenue 468 402 66 16%
Non-advertising revenue 535 454 81 18%
Internal supply (169) (147) (22) 15%
Total external revenue 834 709 125 18%
3. Total advertising revenue (TAR), which includes ITV Family NAR, digital
advertising and sponsorship, was up 16% over the 3 months to the end of March.
Within this, January was up 15%, February up 20%, and March up 15% compared to
the same periods in 2021. TAR is forecast to be down around 6% in Q2 against
very tough comparatives in 2021, which was up 89%. In 2022, April was up 9%,
and May is forecast to be down around 8% and June to be down around 15%
compared to the same periods in 2021. Figures for ITV plc for May and June are
based on ITV estimates and current forecasts.
4. Media and Entertainment key performance indicators
Three months to 31 March 2022 2021 Absolute change Change
%
Total digital revenue (£m) £82m £66m £16m 24%
Total streaming hours (hrs) 247m 267m (20m) (7%)
Share of commercial viewing (SOCV) 34.5% 34.1% 0.4pts
Share of top 1,000 commercial broadcast TV programmes 93% 92% 1pt
● Total digital revenue includes online advertising revenue and
subscription revenue as well as linear addressable revenue, digital
sponsorship and partnership revenue, ITV Win and any other revenues from
digital business ventures.
● Total streaming hours measures the total number of hours viewers
spent watching ITV across all streaming platforms. This figure includes
viewing funded by digital advertising and subscriptions.
● ITV Family share of commercial viewing is the total viewing of
audiences over the period achieved by ITV's family of channels as a proportion
of all ad-supported commercial broadcaster viewing in the UK. ITV Family
includes ITV, ITV2, ITV3, ITV4, ITV Encore, ITVBe, CITV, ITV Breakfast, CITV
Breakfast and associated "HD" and "+1" channels.
● The share of top 1,000 commercial broadcast TV programmes KPI
includes TV viewing from transmission and seven days post-transmission on
catch up, as well as six weeks prior to the transmission window. It excludes
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