‘X Factor’ Ratings Slump Could Cost U.K.’s ITV $16 Million in Ad Revenue (Report)

LONDON - As Simon Cowell-created music competition show X Factor continues to draw weaker ratings for U.K. network ITV1, parent company ITV could lose out on around $16 million in advertising revenue, according to a Wednesday report.

our editor recommends

Simon Cowell's 'The X Factor' to Return to U.K.'s ITV1 With Some Changes

Simon Cowell's 'X Factor' U.K. Looking to Book Olympics Stars for Live Show

'Downton Abbey,' 'X Factor' U.K. Each Draw 9.6 Million Average Viewers for U.K.'s ITV

Analysts say that wouldn't be a major drag on the company's financials, but could affect some investors' confidence in the stock.

After falling ratings last year, the show has remained one of the highest-rated shows on U.K. television this season, but has continued to lose viewers. Saturday's episode was down more than 2 million viewers from the same weekend in 2011, and the season as a whole is currently down by more than 1 million viewers per episode on average compared with last year, according to the Guardian. It cited media buyers as saying that this could cost ITV as much as $16 million.

Last year, ITV charged roughly $192,000 for a 30-second ad spot during The X Factor, adding up to about $4.8 million (£3 million) an episode and more than $152 million (£95 million) for the whole season. This includes the premium-priced semi-final and final, but excludes sponsorship money, particularly a three-year deal with telecom firm TalkTalk struck in 2010 that has been valued at up to $32 million.

The continued audience slump this year means that ITV has not been able to charge the same prices for a 30-second spot, according to the Guardian's media buying sources. On average, the price has come down by about 10 percent, it said. If these trends continue, ITV will make about $136 million (£85 million) from the show this year, it concluded.

In 2010, a banner year for The X Factor's viewing figures, ITV had made well over $160 million (£100 million) from the show, the Guardian reported.

The X Factor accounts for almost 14 percent of ITV1's total revenue between August and December and almost 6 percent of total annual revenue, according to media buyers cited by the Guardian.

One financial analyst estimated that ITV will record total advertising revenue of around $2.41 billion (£1.51 billion). That would mean the lost ad revenue from X Factor would amount to only 0.7 percent of the total.

Peel Hunt analyst Patrick Yau told THR that he expects the lower ratings to have only a "marginal impact" on ITV's financials. But they are "more important for [investor] sentiment," he said. "And this opens a wider question of how long ITV will [continue] X Factor or whether there will be any format innovation/panel changes," the analyst added.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai