Covid-19 sees ITV profits fall by almost a third in 2020
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Joseph O'Halloran
| 09 March 2021
Even though the UK’s leading commercial broadcaster believes that it is seeing an improvement in advertising market trends and potential in its SVOD business, ITV has posted disappointing 2020 financial results in a year that it says business was materially impacted by the pandemic.
ITV logo large 19 Oct 2020
For the year ended 31 December, total external revenue was down 16% on an annual basis at £2.781 billion, with recent revenue powerhouse ITV Studios seeing revenues falling 25% year, impacted by the disruption to the majority of ITV productions from March when the pandemic outbreak began. Total broadcast revenues were down 8%, with total advertising down 11% despite VOD advertising up 17%. Total advertising revenue (TAR) was said to have finished the year well, rising 3% compared with the same period in 2019.

On the back of these revenues, adjusted ITV Group EBITA was down 21% to £573 million. This said ITV was better than external expectations, driven by what it said was a strong end to its fourth quarter and also attributable to tight cost control delivering £116 million of overhead savings. It added that £21 million of these would be permanent. ITV Studios adjusted EBITA was down 43% on an annual basis to £152 million, impacted by the decline in revenue and the costs associated with Covid-19 safety measures. Broadcast adjusted EBITA was down 9% to £421 million, with the decline in advertising partly offset by the reduction in the programme budget.

Examining busines drivers, and especially for advertising, ITV noted that over the year total ITV viewing was up 1% due to the lack of VOD volume drivers, such as Love Island, fewer soaps and no major sporting events. Overall online viewing was down 5%. ITV Family share of viewing (SOV) was down 4% partly impacted said ITV by the volume of the BBC’s news output during the year, fewer episodes of the soaps and less new content due to the pause in productions. ITV’s main channel had its third biggest SOV in a decade, with a 16.7% SOV.

The ITV Hub on-demand portal ended 2020 with 33 million registered users, up 6% compared with the end of 2019. ITV claimed good progress with its BritBox SVOD joint venture which it said was ahead of plan hitting half a million subscriptions in the UK in January 2021 and that BritBox US had increased its subscriptions by 50% over the year. The service now has over 2.6 million subscriptions globally across all SVOD services.

However, despite its optimism, ITV warned that the advertising environment in Q1 2021 was challenging and it forecast TAR to be down around 6% on an annual basis by the end of the quarter. It also expected strong growth in VOD up around 14%, assuming there was no change in the current planned restrictions.

Commenting on the yearly results, ITV chief executive Carolyn McCall said that despite dealing with the effects of the pandemic the company was encouraged by the roadmap out of lockdown, claiming good progress had been made delivering upon strategic priorities with the rollout of the Planet V programmatic addressable advertising platform, good progress with BritBox and the transformation of the ITV Hub.

“Throughout this last year…we’ve worked hard to fulfil our responsibility as a source of reliable and trusted news and to deliver some of the best entertainment into the country’s homes. Our production teams were very innovative in restarting productions quickly and safely in the UK and internationally, while our commercial colleagues inspired advertisers to restart their marketing campaigns,” she remarked.

“We are seeing more positive trends in the advertising market in March and April and the majority of our programmes are now back in production. However, there remains uncertainty in all markets around the world with the potential risk of lockdowns, which if they materialise will affect revenues. 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.”