U.K. TV giant ITV reported first-half 2024 revenue on Thursday, including a slight drop in total revenue and a 10 percent improvement in advertising revenue. The latter jumped 17 percent in the second quarter, driven by the UEFA Euro 2024 soccer tournament that took place in June and July.
ITV had previously forecast advertising revenue to be up around 12 percent in the second quarter and 8 percent for the first half.
ITV Studios saw revenue fall 13 percent in the first six months of 2024 though due to the phasing of deliveries and the expected impact of the U.S. writers’ and actors’ strike. But adjusted EBITA climbed 5 percent to £136 million ($175 million).
ITV, led by CEO Carolyn McCall, on Thursday also touted growth momentum at its streaming business ITVX, which is mostly advertising-supported but also has an ad-free subscription tier. ITVX’s strong performance has continued in the first half, with total streaming hours up 15 percent and monthly active users up 17 percent,” ITV said. “Digital revenues grew 12 percent.”
But the company also noted the impact of previously guided “action to simplify the paid streaming proposition,” including migrating the BritBox U.K. streaming service onto ITVX Premium. This has “a short-term impact on subscriptions and subscription revenue,” the firm said.
ITV’s total external revenue for the first half of 2024 dropped 2 percent with total revenue down 3 percent to £1.90 billion ($2.45 billion). Earnings before interest, taxes, and amortization (EBITA), a key profitability metric, jumped 40 percent to £213 million ($275 million) though “reflecting the operational gearing of Media & Entertainment, the higher margin in ITV Studios and delivery of £23 million of cost savings.”
Looking ahead, “compared to the same period in 2023 which included the Rugby World Cup, total advertising revenue is expected to be broadly flat in the third quarter, with continued strong growth in digital advertising revenues,” ITV said.
At ITV Studios, the full year 2024 “is expected to deliver record profits driven by an increase in higher- margin catalog sales and continued action to drive efficiencies,” the U.K. TV giant said on Thursday. “As guided, revenue will be impacted by the 2023 U.S. writers and actors strike, which will delay around £80 million ($103 million) of revenue from 2024 to 2025, and lower demand from free-to-air broadcasters in Europe in the short term.”
Previous guidance was for ITV Studios annual revenue to be broadly flat. “Our view of the market has not changed but we now expect revenue to be down low single digits, due to a small number of key productions being contracted as executive productions rather than co-productions,” ITV said on Thursday. “The change in contractual arrangement has no impact on profit but does mean we recognize less revenue this year.”
A “small number of contracts” remain under negotiation “which may have a similar outturn of lower recognized revenue but the same profit if they are contracted as executive productions,” the company also warned.
Asked by THR about the drivers behind this update during an earnings conference call, McCall emphasized that this isn’t part of any fundamental changes in industry business models. “We do this all the time, this is no change this year,” she explained.
“It’s really just about the ebb and flow of deal-making,” explained Julian Bellamy, managing director, ITV Studios. “We are winning the same business, we are making the same show, we are making the same profit. It’s just that the accounting treatment is different.” He added: “Every deal is different. We’re in a world of nuance and trade-offs here and judgments around risk-reward.”
ITV management always asks the ITV Studios team “to get the best deals, the right deals for ITV Studios, … and then we deal with the accounting” afterward, ITV CFO Chris Kennedy also highlighted.
“ITV has been transformed over the last five years and we continue to build upon this. We are confident of delivering increased adjusted EBITA this year, following the year of peak net investment in 2023, and are on track to deliver our 2026 key performance indicators targets,” said McCall in a statement on Thursday. “ITV Studios is performing well despite the expected market backdrop and is forecast to deliver record adjusted EBITA over the full year as a result of its scale, its diversification by product, geography and customer, its outstanding creative output and the actions we are taking to drive efficiencies.”
Asked about current ad trends, McCall said the market was “very firm.” The Euros were a bigger boost to June than July, which featured the semifinal and final with England, she explained.
Questioned about the U.K. public broadcaster BBC’s decision to buy and then promote such U.S. series as Suits during the half-time break of Euro soccer games featuring England, ITV’s director of television said, “it does seem peculiar,” but added that this was really a question for the BBC. He said though he was “surprised to see such promotional airtime given to some reruns, or pre-loved, as we call it now, American programs,” he said. “I don’t quite understand why when the BBC [is] falling on difficulty with money and costs of programming and [is] struggling to fund [originals like] Newsnight, they can find the money to buy Suits and Gossip Girl and things like that.”
ITV on Thursday also said it was on track to deliver its targeted £40 million ($52 million) in incremental 2024 cost savings from efficiency measures, including technical and other changes, as well as job reductions. McCall said on the call that she expects about 85 percent of headcount reductions to come from voluntary redundancies.
ITV executives on their Thursday earnings conference call also expressed confidence in the company’s existing welfare measures when asked if they may look at updating ITV’s duty of care protocols on any shows amid the Strictly Come Dancing scandal at the BBC. “Actually, we haven’t had to,” McCall said, calling ITV’s Dancing on Ice the most comparable show. “Whether it’s casting, whether it’s during a show, whether it’s aftercare, I think on all our shows, we’ve done rigorous reviews, and we have very, very strong duty of care.” She added: “We are rigorous
