ITV Plc Q3 Trading Update

Shares of ITV Plc (LON:ITV) fell over 7% on Thursday following its third-quarter trading update for the nine months ending September 30, which revealed significant revenue impacts, particularly from ITV Studios.

Revenue Impact

The broadcaster's group revenue dropped by 8% year-on-year, totaling £2.74 billion, down from £2.98 billion in 2023.

> “ITV Studios Q3 revenue was impacted by the phasing of deliveries and the 2023 US writers’ and actors’ strike,” the company stated.

ITV Studios reported a 20% drop in revenue, amounting to £1.22 billion, primarily due to delays in production deliveries and effects of the strikes. These issues are expected to push about £80 million of anticipated revenue into 2025, negatively affecting the company’s bottom line.

Despite these challenges, ITV remains optimistic about the full-year performance, projecting record adjusted EBITA for ITV Studios, driven by efficiency gains and a robust fourth-quarter delivery schedule. Overall revenue from the division is expected to decline by mid-single digits for the full year, a marginal decrease if excluding strike impacts.

Media & Entertainment Division

ITV’s Media & Entertainment division, including the streaming platform ITVX, showed mixed results:
– 4% year-on-year increase in overall M&E revenue, reaching £1.52 billion.
– Digital advertising revenue grew by 15%, supported by ITVX, which saw 14% growth in streaming hours and increased monthly active users.
– However, non-advertising revenue declined by 7%, which was anticipated.

ITV adjusted its total advertising revenue forecast to a 2.5% increase for the year, but projects a weaker fourth quarter, down 6-7% due to tough comparisons with the 2023 Rugby World Cup.

To manage these challenges, ITV announced an additional £20 million in net cost savings for 2024, with £10 million coming from content cost reductions. Despite the revenue downturn, ITV aims to meet its target of at least £750 million in digital revenue by 2026.