ITV Returns to Ad Growth, Studio Profit Falls in 2020, Global Streaming Subs Exceed 2.6M

ITV CEO Carolyn McCall

ITV CEO Carolyn McCall

The U.K. TV giant expects a first-quarter ad drop amid the latest lockdown, but March and April are "seeing more positive trends," says CEO Carolyn McCall. "The majority of our programs are now back in production."

U.K. TV giant ITV reported an 11 percent drop in advertising revenue for 2020 due to the coronavirus pandemic on Tuesday, but said it made good on its forecast of returning to a slight advertising improvement in the fourth quarter, compared with the year-ago period.

Fourth-quarter ad revenue rose 3 percent. Meanwhile, its ITV Studios unit posted a profit decline for the full year 2020. And the company said its BritBox streaming joint venture with the BBC reached half a million U.K. subscribers in January and has hit more than 2.6 million global subscribers overall.

ITV, led by CEO Carolyn McCall, had late last year said that the return of live sports had started to help advertising trends, with ad revenue falling a less pronounced 7 percent in the third quarter after a big second-quarter drop. Despite a first-quarter gain before the full impact of the pandemic hit, ad revenue for the first nine months of 2020 was down 16 percent, but management at the time forecast that the fourth quarter would see it return to a slight ad gain compared with the same period of 2019.

"Advertising trends are improving with the fourth quarter forecast to be slightly up year on year and 85 percent of our productions in the U.K. and internationally that were paused as a result of COVID-19 are back in production or have been delivered," McCall had said in November. "However, COVID restrictions and further national lockdowns have added production costs and are making it challenging to bring ITV Studios productions back to full capacity."

Due to new pandemic lockdown measures introduced early in 2021, the first quarter of the year has been more challenging again, with ITV forecasting a 6 percent ad revenue drop. "We are now seeing more positive trends, with March expected to be up around 8 percent and April expected to be up between 60 percent and 75 percent, with the four months to the end of April up between 5 percent and 7 percent," the company said.

"We are encouraged by the roadmap out of lockdown," McCall said, referencing the U.K. government's plan to lift all coronavirus pandemic restrictions by late June, if all goes well. "We are seeing more positive trends in the advertising market in March and April and the majority of our programs are now back in production. However, there remains uncertainty in all markets around the world with the potential risk of lockdowns, which if they materialize will affect revenues."

She added: "We are committed to taking further cost out of the business while further investing to accelerate the delivery of our strategy and digital transformation. We have restructured the broadcast business to create the media and entertainment division to better respond to changing viewing habits. ITV Studios is well positioned to take advantage of the continued strong growth in the demand for quality content internationally."

ITV said it is eyeing around £100 million ($138.6 million) of "annualized permanent overhead cost savings" by 2022, compared with 2019, up from its previous guidance of £55 million-£60 million ($69.3 million-$83.1 million). "Around £30 million ($41.2 million) of these savings will be delivered in 2021."

ITV on Tuesday reported that its 2020 revenue dropped 16 percent to £3.3 billion ($4.6 billion), with adjusted earnings before interest, taxes and amortization down 21 percent to £573 million ($795 million). Earnings per share for the year dropped 22 percent.

Last week, ITV announced that it had acquired Oprah With Meghan and Harry, the Oprah Winfrey interview with Prince Harry and Meghan Markle, which it aired on Monday at 9 p.m. on its flagship TV channel after its debut on CBS in the U.S.

On Monday, BritBox U.K. also announced that it was coming to Amazon Prime Video Channels this spring.