High flying Studios business stands out in mixed ITV half year
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Editor
| 27 July 2023
UK broadcaster ITV has hit the headwinds that it expected over the course of the first half of 2023 with weakness in the general advertising market and declines in its Media & Entertainment (M&E) business offset by strong growth in Studios and Digital.
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Despite the year-on-year decline in total revenue, the period to 30 June 2023 marked the second-highest revenue in ITV's history. Total ITV revenue decreased by 1% on an annual basis to £1.964 billion, with external revenue down 2% year-on-year to £1.639 billion. Total advertising revenue plummeted 11% to £811 million yet within which digital advertising accelerated by 24% compared with the same period a year ago to £179 million. Total non-advertising revenue climbed 7% to £1.153 billion including ITV Studios which was up 8% at £1.0 billion.

ITV Group adjusted EBITA decreased by 52% to £152 million, reflecting, said the broadcaster, the challenging advertising market and planned investment in ITVX. ITV Studios adjusted EBITA increased by 2% to £130 million, at a margin of 13%, slipping one percentage point annually, and within our medium-term target range of 13% to 15%. M&E adjusted EBITA decreased by 88% to £23 million.

Drilling deeper into ITV Studios, the broadcaster said that the business line saw strong global demand for content and that its KPI performance in the first half was expected and remains on track to deliver target. The company delivered 109 high-end scripted hours, down over the first half as a result of the phasing of deliveries. This was 133 hours a year ago. Scripted revenue per hour has increased year on year in the first half of 2023. Over the full year, high-end scripted hours are expected to be up year-on-year, based on the current delivery plan.

Nine formats were sold in three or more countries, as programmes continue to travel, including The Voice; Love Island (pictured); My Mum, Your Dad; and Come Dine With. Over the full year, ITV expects format sales to be broadly in line with 2022. The percentage of total Studios revenue from streaming platforms grew to 27% with commissions or development deals with most of the major streamers. This figure was 19% at 30 June 2022. ITV Studios has a level of committed revenues for the full year of 89%, supported by a pipeline of new and returning programmes.

Media & Entertainment (M&E) saw the recently launched ITVX driving what was called a step change in key viewing metrics and strong growth in digital advertising. The planned investment in content is attracting increased users, who are watching more and staying for longer compared to ITV Hub in 2022. Monthly active users were up 29% to 12.5 million and total streaming hours increased 33% to 737 million hours.

"ITV maintained its strength in linear in a challenging advertising market. Looking forward we see a more encouraging outlook as advertisers build their campaigns around the large streaming and linear audiences expected to be drawn to the Women's World Cup, the Rugby World Cup and the eagerly anticipated return of Big Brother,” said ITV chief executive Carolyn McCall commenting on the results. "We remain on track to achieve all our KPI targets which gives us confidence we will deliver at least £750m of digital revenue by 2026. As we said at the full year results in March, 2023 is the year of peak net investment in our streaming business and we expect profit to grow from here."