U.K. TV giant ITV on Thursday reported a 10 percent advertising revenue drop for the first quarter of 2023 amid macroeconomic clouds, slightly less pronounced than its forecast for a roughly 11 percent decrease, with the current second quarter forecast to record a 12 percent decline.
The company, led by CEO Carolyn McCall, said that April ad revenue dropped 12 percent, with May forecast to be down around 10 percent and June to be down around 14 percent.
ITV reported a 7 percent decline in total first-quarter external revenue for the January-March period to £776 million ($979 million) and detailed results for its key business units.
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Quarterly revenue at its production arm ITV Studios was virtually unchanged at £457 million ($577 million). Shows delivered in the latest period in the U.K. and internationally included Big Beasts for Apple TV+, Sky’s Django, ITVX’s Nolly and Queer Eye for Netflix.
Meanwhile, revenue in ITV’s core media and entertainment unit fell 9 percent to £495 million ($625 million), driven by the ad drop, but digital revenue in the unit jumped 29 percent to £106 million ($134 million).
“Total advertising revenue in the first quarter was down 10 percent, as expected and better than the wider TV advertising market,” said McCall. ITV forecast digital advertising revenue to grow more than 20 percent in the current second quarter despite the overall 12 percent projected ad drop in the period, highlighting: “The outlook for total advertising revenue is challenging as expected given the current macroeconomic environment.”
McCall said on Thursday that, “we are looking forward to the third quarter with Love Island and the Rugby World Cup set to draw large broadcast and streaming audiences.”
The company on Thursday also reiterated that ITV Studios’ financial performance in 2023 will be driven by the second half. “ITV Studios continues to demonstrate significant strategic momentum,” said McCall. “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 the fourth quarter of 2022 and with the phasing of deliveries expected to be weighted to the second half of 2023.”
Earlier in the year, the company had said: “With ITV’s strong position in a growing market, we expect ITV Studios to deliver at least 5 percent average revenue growth per annum to 2026 and grow ahead of the market.”
ITVX, the company’s advertising-supported streaming service launched late last year, also got a shoutout from CEO McCall. “ITVX has sustained its strong launch, with a 49 percent increase in streaming hours and a 29 percent growth in digital revenue in the quarter,” she said. “Exclusives, such as Nolly and The Twelve attracted new viewers, 80 percent 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 (soccer tournament) attracted large streaming audiences.”
ITV management has been betting on a “digital first” content strategy as part of McCall’s “More Than TV” strategy. The streaming push is part of a target to double digital revenue to 750 million pounds ($1 billion) by 2026.
McCall expressed confidence in her team’s progress, saying: “ITV is successfully executing phase 2 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.”
