ITV’s share price rises as broadcaster beats advertising sector woes

ITV’s share price climbed 3.2 per cent this morning as the broadcaster revealed growth in advertising and revenues from its production arm ITVStudios.

The figures

Total external revenues at Britain’s biggest free-to-air broadcaster grew five per cent to £772m, with all parts of the business contributing. Revenues at ITV Studios were up 11 per cent to £382m, while total advertising rose three per cent.

Broadcast and online revenues climbed three per cent to £526m.

The business said it was on track to deliver good organic revenue growth in ITV Studios and double digit revenue growth in online.

And it expects net advertising to jump by around 15 percent in June, when viewers tune in for the 2018 World Cup, to be held in Russia.

Why it’s interesting

The company is in the middle of a strategic review under new chief executive Carolyn McCall, but although the economic environment is uncertain, ITV’s online advertising is strong.

Under her predecessor, Adam Crozier, ITV diversified away from its broadcast advertising business model and into content production, distribution and ownership, and ITV Studios’ continued growth has helped to offset other weaker parts of the business.

However in February, profits before tax fell six per cent to come in at £800m, underlining the need for the former EasyJet boss to find solutions as viewers increasingly switch to alternative platforms.

What ITV said

“We have started the year well both on and off screen,” said McCall.

“Highlights include strong performances from Coronation Street and Emmerdale, the successful return of Dancing on Ice and both Saturday Night Takeaway and our long running drama Vera delivering their best series ever.

“And we have an exciting schedule for the rest of the year including Britain’s Got Talent, the Football World Cup, the return of Love Island and our new period drama Vanity Fair, from the producers behind Victoria and Poldark.”

McCall added: “While the economic environment remains uncertain online advertising continues to grow strongly. We expect ITV total advertising to be up two per cent over the first half, but profits will reflect the timing of the Football World Cup. Over the full year we are on track to deliver double digit growth in online revenue and good organic revenue growth in ITV Studios.

“The strategic refresh is progressing well with great input and engagement from ITV people across the business. I look forward to sharing an update at our interim results in July.”

What analysts said

George Salmon, Equity Analyst at Hargreaves Lansdown, warned that the group “faces a pretty serious challenge”.

“The way we watch TV is changing, and the rise of streaming services has put ITV on a collision course with Netflix and Amazon,” he said. “We wouldn’t be surprised to see new chief executive Carolyn McCall allocate more funds to programming, and give online a shot in the arm.

“In the near term, the group will be cheering on England in the World Cup. Live sport remains the preserve of traditional television groups rather than streaming services, and England games are still essential viewing. That means the tournament has the potential to deliver an advertising bonanza.

“ITV has the rights to the opening game and England’s last group match, and will have first dibs on the second round matches too. The BBC has its pick of the quarter finals, but if England’s recent form in major tournaments is anything to go by, that won’t matter too much for ITV – the three lions might be on the plane home by then anyway.”

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