ITV revenue ticks up despite worsening ad revenue decline

ITV has reported a 2% revenue increase for 2017 despite a 5% fall in advertising which was worse than the previous year but in line with industry estimates.

Carolyn McCall: became ITV chief executive this year
Carolyn McCall: became ITV chief executive this year

On an investor call, new ITV chief executive Carolyn McCall said the TV industry did not have to fight that hard for advertising in the past and both ITV and the wider TV industry need to do more to engage advertisers.

The UK’s biggest commercial broadcaster reported revenue at £3.13bn, up 2% year on year, which it said was driven by double-digit growth in non-net advertising revenue. 

NAR for the ITV family of channels, however, was down 5% to £1.59bn – worse than the 3% drop in 2016, which was the first annual fall in ad revenues for ITV since the 2009 recession.

Nevertheless, analysts at Liberum said the advertising outlook is "better than expected" and ITV expects the first quarter and first half of 2018 to be positive. Liberum also believes ITV is looking at an acquisition, possibly STV which would "make sense". ITV will benefit in the second quarter from World Cup football coverage.

"We thought Q1 would be more flat, especially as ITV usually gets impacted by weighting / timing issues around summer sporting events," Liberum added in its investor note this morning.

Due to the uncertain economic outlook, retail, finance and food advertising categories continue to see declines for ITV, which blamed inflationary pressures caused by the weak pound for reduced spend from advertisers.

This came despite positive news from supermarkets, which increased spend, as well as the FMCGs which returned to spend in the second half of 2017.

However, a lack of TV advertising from high street brands has continued to drag down ad revenue from retail.

Entertainment and leisure advertising was down, which ITV said was impacted negatively in comparison to higher spending during European Football Championship coverage in 2016. 

Cars and telecoms, meanwhile, increased their spend around product launches. Digital brands are continuing to "spend heavily" on TV to build brand awareness, ITV added.

Broadcast and online total revenue was down 3% year on year to £2.08bn while there was 7% growth in online, pay and interactive, driven by double-digit growth in online advertising. However, this was offset by the 5% decline in NAR.

Including sponsorship, VOD and self-promotion, ITV total advertising was down 3%.

ITV Studios’ adjusted earnings before interest, taxes and amortisation was flat at £243m. ITV said this had strong underlying growth, but the comparison includes a £37m benefit from The Voice of China. Broadcast and online adjusted Ebita was down 7% to £599m.

McCall, the former easyJet boss who replaced Adam Crozier as ITV chief executive at the beginning of the year, described the company’s performance in 2017 as "strong" despite a challenging environment.

She added: "We are focused on our strategic refresh. This will enable us to define a clear strategy and priorities that will highlight the opportunities and address the challenges that we face in an increasingly competitive media landscape."

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