ITV predicts 7% drop in fourth quarter ad revenues

ITV is expecting advertising revenue falls in the wake of the Brexit vote to intensify in the fourth quarter, according to its trading update this morning.

ITV: October ad revenue down 11% on last year, when there was Rugby World Cup coverage
ITV: October ad revenue down 11% on last year, when there was Rugby World Cup coverage

The UK's biggest broadcaster reported Q3 ad revenue had fallen by 4% and October was down by 11%, though last year’s figure was boosted by the Rugby World Cup. 

For the fourth quarter it expects a 7% drop which will translate into a full-year decline of 3%, though ITV believes this will outperform the market. 

Last month Sky reported its Q3 ad revenues had fallen by 3% in the three months after the UK's vote to leave the European Union in June.

Chief executive Adam Crozier said: "In recent weeks the political and economic uncertainty has increased and we are currently seeing more cautious behaviour by advertisers."

Ad revenues recorded in the first nine months of the year came in at £1.21bn, down 1% year-on-year. 

However, with 15% growth in other revenues including its production arm, overall revenues increased by 5% to £2.16bn.

Crozier added: "Our strategy of rebalancing and strengthening ITV continues to deliver." 

ITV said it is "on track" to delivering £25m in savings as it announced last month. ITV is cutting 120 jobs, which is about 3% of its workforce, amid expectations of 2017 being a difficult year.

Ian Whittaker, analyst at Liberum Capital, said ITV's trading update today was in line with market expectations.

He said: "Q3 revenues look to have fallen 6.4% year on year with the growth in Online, Pay and Interactive slowing down to the mid-teens level from 26% growth in H1 – however, we are not worried about this as we think the "quality" parts of online and interactive are continuing to grow well, it is more an effect of lumpy interactive revenues and the drop-off of the Rugby World Cup boost last Q3."

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