ITV Predicts Strongest Full-Year Ad Revenue Growth in Years
The U.K. home of 'Downton Abbey' and 'X Factor,' led by CEO Adam Crozier, expects its "best outperformance of the market" in five years
U.K. TV giant ITV, the British home of Downton Abbey and The X Factor, on Thursday reported third-quarter advertising revenue growth of 4 percent, leaving ad revenue up 6 percent for the first nine months of the year.
For the fourth quarter, the company predicted 1 percent-2 percent ad growth, with the full year trending to be up 5 percent, "significantly ahead of the market" and on track to be its strongest ad growth rate in several years.
Said CEO Adam Crozier: "We’ve made further strong progress in growing all parts of ITV, and we’re on track to deliver another year of double-digit profit growth. Our broadcast business has performed strongly with advertising revenues up 6 percent in the first nine months. We expect to be up around 5 percent over the full year, well ahead of the U.K. television advertising market and our best outperformance of the market for five years."
The bullish ad commentary comes at a time when U.S. entertainment giants have reported weaker TV ad momentum in their latest earnings reports.
Liberum Capital analyst Ian Whittaker said in a first reaction that he had forecast slightly higher full-year ad revenue growth, but wasn't changing his overall growth projection for the company's full year. "While our 5.9 percent full-year growth for TV advertising revenues may look high compared with 5 percent guidance, our 17 percent growth for online and interactive looks low compared with guidance of 24 percent," he said.
Total external revenue at ITV rose 8 percent for the nine-month period to $2.84 billion (£1.80 billion).
The ITV Studios content production arm continued to grow strongly, ending the first nine months of the year up 10 percent with revenue of $960 million (£609 million), driven by acquisitions, including in the U.S. Full-year revenue in the unit is on track to grow by around $158 million (£100 million) on a constant currency basis, ITV said.
"Studios revenues would have been £22 million higher on a constant currency basis," ITV said. "If rates stay broadly similar, the full-year foreign exchange impact on Studios revenues and [operating profit] will be around $47 million [£30 million] and $9.5 million-$12.6 million (£6 million-£8 million), respectively."
Broadcasting and online revenue rose 7 percent for the first nine months. The company's total non-advertising revenue increased 9 percent.
Crozier added: "Looking ahead to next year we anticipate continued revenue growth right across the company. We expect Studios to grow revenue by a similar amount to this year driven by the full-year benefit of our acquisitions and a return to organic growth fueled by the global demand for high quality content. In 2015, our investment in scripted content will begin to deliver value with new U.K. drama including Jekyll and Hyde, The Trials of Jimmy Rose and Home Fires, and U.S. dramas including Aquarius, Texas Rising and The Good Witch. We’ll also have the benefit of Thunderbirds Are Go! as well as a U.S. version of Saturday Night Takeaway for NBC."
And Crozier vowed: "Our broadcast business will benefit from our ongoing creative investment, including a full year of our two new channels and the positive economic and advertising outlook. In 2015 we will focus on improving share of viewing, and we have a strong program schedule, with new and returning drama including the second [season] of Broadchurch, as well as the Rugby World Cup."