- Ofcom signals softening stance on advertising breaks

- Broadcaster’s ITVX streaming service faces still competition

- ITV has been losing audience share in recent years

TV watchdog Ofcom may soften its demands for larger gaps between in-programme advertising breaks as it reassesses the wider UK TV broadcasting industry.

More frequent ad breaks would be positive news for TV broadcaster ITV (ITV), giving it greater scope for generating bigger revenues from brands eager to reach UK consumers via TV.

STREAMING CHALLENGE TO TRADITIONAL TV

Ofcom has acknowledged that traditional broadcasters like ITV, and including Channel 4 and Channel 5,  are facing mounting competitive pressure from streaming services, such as Netflix, Disney+ and Amazon Prime.

Under current rules, broadcasters are allowed to show seven minutes of advertising for every hour of programming, with individual ad breaks not exceeding three minutes and 50 seconds.

Short-run programmes, those that last between 21 and 44 minutes, are only allowed a single ad break. A softening of these restrictions by the regulator would provide ITV with greater scope to run more ads per TV hour, although how that might impact audience figures remains an unknown at this stage.

ITV HOPING TO FIND STREAMING X-FACTOR

ITV’s recent decision to launch its own streaming platform, ITVX,  is a tacit acknowledgement of the threat it faces from streaming services, which have hit viewing figures hard in recent years.

ITV’s declining share
2022 2021 2020
BBC 30.9% 30.9% 31.1%
ITV 20.5% 23.0% 24.6%
Channel 4 10.5% 10.3% 9.2%
Channel 5 7.7% 6.2% 6.3%
Source: BARB, January weekly share

In 2021, television viewers watched 15.1 billion hours on ITV Hub and its linear channels. This was a decline of 9% from 2020 when viewers watched 16.6 billion hours. Audience share has also declined, according to BARB, the Broadcasters’ Audience Research Board.

TIMING & COST

Launching another streaming service in an increasingly competitive market at a time when household budgets remain under extreme inflationary pressure is likely to worry investors.

This is reflected in ITV’s share price, which has lost 44% so far in 2022 at 64p, and has fallen 77% since 2015.

Launching ITVX will also not be cheap. ITV intends to invest £1.23 billion in content this year, and £1.3 billion in 2023. The broadcaster will need to build a substantial subscriber base for ITVX fast if it is to not run into funding difficulties.

Ofcom is expected to give more details about potential changes  to advertising rules later this year.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 01 Jul 2022