- Content costs remain a concern for investors

- Recession impact on ads revenues also a worry

- Analyst still sees ‘strategic value’ in production arm

A reassuringly strong first quarter performance for advertising revenue at free-to-air broadcaster ITV (ITV) has helped stem losses in the share price but investors remain cautious.

The company reported total external revenue was up 18% in the three months to 31 March to £834 million. The production arm ITV Studios saw revenue up 23% to £458 million, with total ad revenue up 16% to £468 million – compared with the £454 million pencilled in by analysts.

However, the market reacted with a bit of a shrug, the shares up just 0.3% to 67.3p. The shares are still down nearly 40% since the full year results, which were accompanied by news of the launch of ITV’s new streaming platform ITVX. Shareholders headed for the exit, concerned about the costs of this venture and the wider costs of content more generally, as well as the uncertain backdrop for advertising spend.

ITV says ITVX remains on track for a fourth quarter 2022 launch but acknowledged it faces tough comparatives with 2021 in terms of advertising given last summer’s Euros football tournament.


The company also said it was on track to hit its £17 million cost saving target for this year and said it remained confident of hitting its £750 million revenue target for its digital offerings by 2026.

Shore Capital analyst Roddy Davidson said: ‘We are pleased to note the strong Q1 performance and reassuring outlook comments and notwithstanding a degree of caution over the potential influence of cyclical factors on advertising spend and tough comps in Q2 (versus the Euros), we are confident that public sector broadcasters will remain a very influential and effective platform for brand advertising for some time to come.

Davidson also pointed to ‘the strategic value and impressive momentum of the group’s production business (which is benefiting from a very strong demand backdrop) and the potential for its advertising-funded video-on-demand ITVX to gain significant traction’.


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Issue Date: 11 May 2022