REG - ITV PLC - ITV plc Q1 Trading Update
11/05/2023 07:00
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RNS Number : 0032Z ITV PLC 11 May 2023
ITV plc Q1 Trading Update for the 3 months to 31 March 2023
Continued significant strategic progress; digital revenues up 29%
Carolyn McCall, ITV Chief Executive, said:
"ITV continued to make significant strategic progress in the quarter and all
parts of the business performed in line with expectations.
"ITVX has sustained its strong launch, with a 49% increase in streaming hours
and a 29% growth in digital revenue in the quarter. Exclusives, such as
Nolly and The Twelve attracted new viewers, 80% of whom went on to explore
other content on ITVX. In addition, live simulcast viewing of our biggest
shows and sports events, including Love Island and the FA Cup attracted large
streaming audiences.
"ITV Studios continues to demonstrate significant strategic momentum. With a
strong pipeline of content and committed revenues, it is on track to deliver
mid-single digit revenue growth over the full year, ahead of the market. This
follows record revenues in Q4 2022 and with the phasing of deliveries expected
to be weighted to the second half of 2023.
"Total advertising revenue in Q1 was down 10% - as expected and better than
the wider TV advertising market. We are looking forward to Q3 with Love
Island and the Rugby World Cup set to draw large broadcast and streaming
audiences.
"ITV is successfully executing Phase Two of its More Than TV strategy, despite
the current challenging macro and geopolitical environment, as we continue to
satisfy the growing demand for content globally and the desire for advertisers
to secure both mass reach and targeted digital audiences."
Financial and operating performance for the three months to 31 March as
expected
● Total external revenue down 7% at £776 million (2022: £834
million)
ITV Studios
● Total ITV Studios revenue, including the benefit of foreign
exchange, was flat at £457 million (2022: £458 million) with the phasing of
deliveries in 2023 expected to be weighted to the second half
● ITV Studios delivered a wide range of new and returning programmes
and formats in the UK and internationally as it continues to diversify by
genre, geography and customer
○ Deliveries in the UK and internationally included Nolly for ITVX,
Django for Sky, Big Beasts for AppleTV+ and Queer Eye for Netflix
ITV Media & Entertainment (M&E)
● M&E revenue was down 9% at £495 million (2022: £545 million),
with total advertising revenue (TAR) as expected down 10%, better than the
wider TV advertising market
● Within this digital advertising revenue was up 30% at £87 million
compared to the same period in 2022
● Total M&E non-advertising revenue in the quarter was flat with
growth in subscription revenue offset by the expected decline in SDN revenue
● ITVX, our free, ad-funded streaming service, continued to perform
strongly. Total digital revenues were up 29% and total streaming hours were up
49% in Q1
● We maintained our strength in delivering mass reach with 93% of
the top 1,000 commercially broadcast TV programmes and 34.4% share of
commercial viewing on channels
Outlook
ITV Studios
● We expect ITV Studios to deliver at least 5% average organic
revenue growth per annum to 2026, and grow ahead of the market as we further
strengthen and diversify the business, against the background of continuing
strong global demand for content. In 2023, we are on track to deliver
mid-single digit revenue growth, ahead of the market, following record
revenues in Q4 2022 and the phasing of deliveries within 2023 weighted to the
second half
● We are committed to delivering adjusted EBITA margin for ITV
Studios of 13% to 15% over the period to 2026. As previously guided, we expect
the margin to be at the lower end of the range in the shorter term as a result
of the current inflation in the production market
Media & Entertainment
● In Q2 we continue to see strong growth in digital
advertising with revenues expected to be up over 20%. The outlook for TAR is
challenging as expected given the current macroeconomic environment with TAR
forecast to be down 12% in Q2
● We are further strengthening ITVX with must-see content,
such as Malpractice, Crime and Love and Death, and further enhancing the user
experience. This, together with our deep relationships with advertisers and
strong demand for digital advertising through Planet V, continues to give us
confidence that we will deliver at least £750 million of digital revenues by
2026
● We welcome the publication of the draft Media Bill, which
sets out the government's intention to update and reform the legal and
regulatory framework for broadcasting. This should ensure that the content
from the PSBs, including ITV, will be on streaming platforms with prominence
for both live and on-demand content
Given the current challenging macro and geopolitical environment, we continue
to manage our costs tightly. We remain committed to delivering £15 million of
cost savings in 2023 as part of our previously announced £50 million cost
saving target by 2026. This is in addition to the £106 million cost programme
delivered between 2018 and 2022.
ITV's balance sheet remains robust, enabling us to invest behind the strategy
and deliver returns to shareholders in line with our capital allocation
policy.
NOTES TO EDITORS
1. Unless otherwise stated, all financial and operating figures refer to the
3 months ended 31 March 2023, with growth compared to the same period in 2022.
2. Group financial performance
Revenue for three months to 31 March (£m) 2023 2022 Change Change
£m %
Media and Entertainment 495 545 (50) (9)
ITV Studios 457 458 (1) (0)
Total revenue 952 1,003 (51) (5)
Internal supply (176) (169) (7) (4)
Total external revenue 776 834 (58) (7)
Revenue for three months to 31 March (£m) 2023 2022 Change Change
£m %
Total advertising revenue 419 468 (49) (10)
Non-advertising revenue 533 535 (2) (0)
Internal supply (176) (169) (7) (4)
Total external revenue 776 834 (58) (7)
3. Total advertising revenue (TAR), which includes ITV Family NAR, digital
advertising and sponsorship, was down 10% over the 3 months to the end of
March. Within this, January was down 9%, February down 9% and March down 13%,
compared to the same periods in 2022. TAR is forecast to be down 12% in Q2
2023 with April down 12% and May forecast to be down around 10% and June to be
down around 14% compared to the same periods in 2022. 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 2023 2022 Absolute change Change
%
Total digital revenue (£m) £106m £82m £24m 29
Total streaming hours (hrs) 389m 261m 128m 49
Share of commercial viewing (SOCV) 34.4% 34.5% (0.1) (0)
Share of top 1,000 commercial broadcast TV programmes 93% 93% - -
● 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 both
ad-funded and subscription streaming. In Q1 2022, this was reported as 247
million hours, which included some estimates of total streaming viewing from
third party data providers and has been updated to reflect more recently
available data
● 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 commercial broadcast TV viewing in the UK, from transmission and seven
days post transmission on catch up. ITV Family includes ITV1, ITV2, ITV3,
ITV4, 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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