ITV Revenue Drops 2 Percent, but Studio Unit Grows Helped by 'Love Island' U.S.

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ITV CEO Carolyn McCall

The U.K. TV giant also unveils an addressable advertising platform dubbed Planet V, with CEO Carolyn McCall saying: "We remain very focused on building a digitally led media and entertainment company."

U.K. TV giant ITV early Tuesday reported lower revenue for the first nine months of the year, with its studio arm, whose hit shows include Love Island, growing to partially make up declines elsewhere. 

The company reiterated that advertising continued to be affected by Brexit uncertainty, but said second-half strength at ITV Studios kicked in during the third quarter with a return to "good growth" after a 6 percent revenue decline for the first six months of the year.

Said CEO Carolyn McCall: "ITV Studios' performance in 2019 will benefit from a very strong second half delivery schedule, and our third-quarter performance reflects this, with good growth across the business, particularly from ITV America with Love Island U.S. and the part delivery of Hell's Kitchen and Snowpiercer. We expect this performance to continue in the fourth quarter, and over the full year we are confident that we will deliver at least 5 percent growth in ITV Studios' total revenues."

Total external revenue at ITV fell 2 percent for the nine-month period to 2.2 billion pounds ($2.8 billion), with revenue at the ITV Studios content production arm ending the period up 1 percent driven by the third-quarter gain.

Broadcasting and online revenue fell 3 percent, with ad revenue down 3 percent for the nine months and up 1 percent in the third quarter, helped by ITV's coverage of the Rugby World Cup. Management had guided to roughly flat advertising revenue for the third quarter after a 5 percent decline in the first half of the year.

"Total advertising is forecast to be flat to up 1 percent in the fourth quarter with October up 5 percent, November flat to down 1 percent and December flat to down 3 percent," ITV said Tuesday. "Over the full year we expect total advertising to be down around 2 percent."

McCall, who has been leading the company since the start of 2018, last summer unveiled a strategy refresh for ITV under the theme "More Than TV." It focuses on strengthening the integrated producer broadcaster business model of operating networks and the ITV Studios TV production unit, growing U.K. and global production and creating a scaled direct-to-consumer business.

ITV on Tuesday announced the launch of a new addressable advertising platform called Planet V, saying "the fully programmatic, premium advanced advertising platform will launch at the beginning of 2020."

Said the company: "Planet V will allow advertisers and agencies control over the purchasing of their campaigns across ITV’s premium VOD service, the ITV Hub, allowing them to optimize and monitor campaigns in real time, 24 hours a day, every day of the year, building audiences with ITV’s first-party data, which can also be blended with advertisers’ own data." The platform is built on global digital company Amobee’s advertising technology, and ITV said it was extending an open invitation to other TV companies to join the platform.

Overall, McCall said: "We remain very focused on building a digitally led media and entertainment company to create a stronger, more diversified and structurally sound business."

Looking at 2020, the ITV CEO said the current strength at ITV Studios will affect the production arm next year. "The phasing of deliveries in the second half of 2019 will adversely impact ITV Studios' performance in 2020, although we continue to expect that over the medium-term ITV Studios revenues will grow by at least 5 percent compound annual growth with a 14 percent to 16 percent margin. We continue to build our creative pipeline and have a strong slate of new and returning programs in the U.K. and internationally for both broadcasters and OTT platforms, including The Serpent, Zero Zero Zero, Suburra, Crank Yankers, Queer Eye, Saturday Night Takeaway and Love Island globally."