ITV’s revenues dropped in the first quarter due to the impact of the US writers’ and actors’ strike, despite recovering advertising sales. The share price was up by 1.8% to 75.7p per share in Thursday’s business. Total turnover decreased by 7% to £887 million, with sales at ITV Studios falling by 16% to £382 million.
The strike in the US was not the only challenge for ITV’s production division. The company cited program delivery phasing towards the second half of the year and weaker demand from European free-to-air broadcasters due to the tough ad market as additional factors affecting trading. Despite these challenges, ITV expects total divisional revenues to remain flat in 2024, with good underlying growth offsetting the impact of the strikes.
However, there was some positive news for ITV in other areas. Revenues at its Media and Entertainment division increased by 2% to £505 million, with total advertising revenues improving by 3% compared to the same quarter in 2023. The company anticipates a further improvement in TARs to 12% in the current quarter, boosted by the UEFA European Championships in June. ITVX, the streaming service, also performed well at the start of 2024, with total streaming hours increasing by 16% to 449 million hours.
ITV’s chief executive, Carolyn McCall, expressed confidence in the company’s strategy, noting a strong pipeline of programs and increasing diversification of the customer base towards streamers. ITV Studios is expected to achieve organic revenue growth of 5% per annum from 2021 to 2026, ahead of the market average, with a margin of 13 to 15%. The Media and Entertainment division is on track to achieve at least £750 million in digital sales by 2026.
Analyst Adam Vettese from eToro acknowledged the sluggish start to the year for ITV but highlighted the upcoming events like the Euros in the summer that could boost viewer numbers and advertising revenue. While investors may be wary of ITV’s reliance on its program pipeline to offset the slow start, there is optimism that the company’s strong performance in streaming and strategic growth targets will help navigate these uncertainties.
