REG - ITV PLC - ITV plc Q3 Trading Update
08/11/2023 07:00
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RNS Number : 7069S ITV PLC 08 November 2023
ITV plc Q3 Trading Update for the nine months to 30 September 2023
Carolyn McCall, ITV Chief Executive, said:
"ITV continues to make 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 in the UK and internationally.
"Studios and M&E digital revenues both grew strongly in the nine months to
the end of September, more than offsetting the expected decline in linear
advertising, delivering total group revenue growth of 1%.
"ITV Studios grew faster than the market, with 9% revenue growth, driven by
its position as a scaled and diversified global production business.
"ITVX had a successful nine months delivering 27% growth in total streaming
hours which, in turn, helped deliver 23% growth in digital revenue. Growth in
digital advertising revenues continues to outperform other broadcasters
reflecting ITVX's compelling viewer and advertising proposition.
"We are on track to deliver £15 million of cost savings in 2023, as part of
our previously announced £50 million cost saving target between 2023 and
2026. In addition, we will rephase £10 million of content spend from 2023
into 2024.
"It is evident that our strategy of growing the Studios and M&E digital
business is helping ITV to offset the current headwinds and we remain
confident in delivering our 2026 targets, when we expect two-thirds of revenue
to come from these growth drivers.
Group revenue and operating performance as expected with strong growth in ITV
Studios and M&E digital revenue for the nine months to 30 September 2023
● Total revenue was up 1% at £2,975 million (2022: £2,948 million),
with growth in ITV Studios and M&E digital revenues more than offsetting
the decline in linear advertising revenue as we continue to diversify the
business. Total external revenue was flat at £2,532 million (2022: £2,523
million)
ITV Studios
● Total ITV Studios revenue was up 9% at £1,516 million (2022: £1,387
million)
● 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
○ including Fifteen Love for Amazon Prime; Love Island USA S5 for
Peacock; and World on Fire S2 for the BBC
Media & Entertainment (M&E)
● M&E revenue was down 7%, as expected, at £1,459 million (2022:
£1,561 million) driven by total advertising revenue (TAR) down 7%
● Digital advertising revenue (a component of digital revenue)
remained strong, up 25% at £283 million to the end of September (2022: £227
million)
● Total M&E non-advertising revenue was down 3% with good growth
in subscription revenue offset by the expected decline in SDN revenue
● ITVX continued to perform strongly. Total digital revenues (see note
4) were up 23% and total streaming hours were up 27% to the end of September
with monthly active users continuing to grow in line with our expectations
● We maintained our strength in delivering mass reach for advertisers
through the quality and breadth of our schedule with Love Island, the Women's
Football World Cup and the Rugby World Cup all drawing large broadcast and
streaming audiences
Outlook
ITV Studios
● We expect ITV Studios to deliver total organic revenue
growth of at least 5% per annum on average to 2026 and to grow ahead of the
market as we further strengthen the business
● We continue to expect good global demand for ITV's high
quality content over the medium term. 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. The latter is expected to defer revenues from 2024 into
2025
● Over the full year 2023, we expect to deliver around 3%
growth in total Studios revenue, following 19% growth in 2022. On an organic
basis, we expect average growth over 2022 and 2023 to be well ahead of our
medium term target and the wider market
● Q4 2023 is impacted by the phasing of deliveries in 2023
which are weighted to the first nine months, including big budget programmes
such as Franklin and Physical S3, both for AppleTV+
● We are committed to maintaining an adjusted EBITA margin for
ITV Studios of 13% to 15% over the period to 2026
Media & Entertainment
● With the continued successful performance of ITVX, we remain
confident in delivering at least £750 million of digital revenues by 2026
● The advertising market remains challenging and over the full
year 2023 we expect ITV TAR to be down around 8% versus 2022 TAR, which was
the second highest in ITV's history and included the positive impact of the
FIFA World Cup
● In light of these conditions, total content spend for the
full year will be £10 million lower than previously guided at around £1,290
million as we rephase content into 2024
● We welcome the inclusion of the Media Bill in the King's
Speech, as the UK Government sets out its legislative agenda for the
forthcoming year. The draft Media Bill set out the Government's intention to
update and reform the legal and regulatory framework for television,
particularly delivered online. This should ensure that the content from the
public service broadcasters, including ITV, will be included in prominent
positions on streaming platforms
ITV has made good strategic progress in the nine months to 30 September 2023
driven by strong execution and we are on track to deliver all our KPI targets
by 2026.
We continue to review our cost base in order to deliver further savings, in
addition to our current £50 million target to 2026.
Our balance sheet is robust which enables ITV to invest behind our strategic
priorities 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
nine months ended 30 September 2023, with growth compared to the same period
in 2022.
2. Group revenue performance
Revenue for nine months to 30 September (£m) 2023 2022 Change Change
£m %
Media and Entertainment 1,459 1,561 (102) (7)
ITV Studios 1,516 1,387 129 9
Total revenue 2,975 2,948 27 1
Internal supply (443) (425) (18) (4)
Total external revenue 2,532 2,523 9 -
Revenue for nine months to 30 September (£m) 2023 2022 Change Change
£m %
Total advertising revenue 1,233 1,329 (96) (7)
Non-advertising revenue 1,742 1,619 123 8
Internal supply (443) (425) (18) (4)
Total external revenue 2,532 2,523 9 -
3. Total advertising revenue (TAR), which includes ITV Family NAR, digital
advertising and sponsorship, was down 7% over the nine months to the end of
September. Q3 was up 1%, with July down 3%, August up 7% and September flat
compared to the same periods in 2022. TAR is forecast to be down around 8%
over the full year with October up 2%, November expected to be down around 15%
and December expected to be down around 10% to 15% compared to the same
periods in 2022 which included the positive impact of the FIFA World Cup.
Figures for ITV plc for November and December are based on ITV estimates and
current forecasts.
4. Media and Entertainment key performance indicators
Nine months to 30 September 2023 2022 Absolute change Change
%
Total digital revenue (£m) £340m £276m £64m 23%
Total streaming hours (hrs) 1,096m 863m 233m 27%
Share of commercial viewing (SOCV) 32.8% 33.2% - (0.4%pts)
Share of top 1,000 commercial broadcast TV programmes 93% 93% - -
● Total digital revenue includes revenue from digital advertising,
subscriptions, linear addressable advertising, digital sponsorship and
partnerships, ITV Win and any other revenues from digital business ventures.
● Total streaming hours is the total number of hours viewers spent
watching ITV across all streaming platforms, reported at a device level. This
figure includes both ad-funded and subscription streaming. In Q3 YTD 2022,
total streaming hours were reported as 813 million hours, which included some
estimates of total streaming viewing from third party data providers and has
been updated to reflect more recently available and accurate 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 ad-supported commercial broadcaster viewing in the UK. ITV Family
includes ITV, 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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