ITV Revenue Falls 1 Percent in First Nine Months as Ad Drop Offsets Growth at Production Arm

ITV headquarters in London - H 2017
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The U.K. TV giant lauds "strong growth at ITV America" and forecasts a return to ad revenue growth in the fourth quarter, but still sees "political and economic uncertainty" amid Brexit.

U.K. TV giant ITV, the British home of The X Factor, on Tuesday reported an advertising and total revenue decline for the first nine months of the year, while its studio arm continued its growth revenue. 

Total external revenue at ITV fell 1 percent for the nine-month period to 2.13 billion pounds ($2.79 billion).

The company's total non-advertising revenue increased 8 percent over the first three quarters of the year, with revenue at its ITV Studios content production arm ending the period up 9 percent at 1.00 billion pounds ($1.31 billion).

But broadcasting and online revenue fell 4 percent to 1.47 billion pounds ($1.93 billion), with ITV family ad revenue down 7 percent, compared with a 1 percent drop in the year-ago period. 

For the full year, ITV forecast a 5 percent ad drop, saying "we again expect to outperform the TV ad market in 2017." The company forecast its ad revenue to be up 1 percent in the fourth quarter, with October down 1 percent, November trending up 2 percent and December set to bring in a 1 percent gain.

In a reference to Brexit, ITV executive chairman Peter Bazalgette said Tuesday that "we are currently seeing a return to TV advertising from some of the fast-moving consumer goods and grocers, although wider corporate confidence in the U.K. continues to be impacted by political and economic uncertainty."

ITV has said it is confident that ITV Studios will for all of 2017 "deliver good organic revenue growth with adjusted EBITA broadly in line with last year, impacted by ongoing investment in drama and the timing of program deliveries."

On Tuesday, it reiterated that ITV Studios would for all of 2017 report "good organic revenue growth with profit broadly in line with last year."

Bazalgette said that "ITV Studios delivered a strong performance with good underlying growth across all parts of the business and particularly strong growth in ITV America" during the first nine months of 2017, adding: "We are making real progress in building a European scripted business with the recent acquisition of Italian producer Cattleya. This, along with our investment in Tetra in France and our existing European drama businesses, will enable us to benefit from the increasing demand for locally produced content with global appeal."

ITV said its studio arm saw organic revenue assuming constant currency exchanges rise 3 percent in the first three quarters of the year. The company also said that ITV Studios "has a healthy pipeline of new and returning programs into 2018."

ITV in July named easyJet CEO and former CEO of The Guardian Media Group Carolyn McCall its new CEO, effective Jan. 8. She will become the first woman to run ITV. Longtime CEO Adam Crozier earlier this year had announced he was stepping down June 30.

Chairman Bazalgette took on the role of executive chairman during the interim period, while ITV finance chief Ian Griffiths was promoted to the combined role of COO and group finance director to lead the executive team for the interim period.

"We will enter 2018 in good shape with a strong operating performance underpinned by a robust balance sheet, and we look forward to the arrival of our new CEO, Carolyn McCall, early in the new year," Bazalgette said.