ITV sees Brexit link as weak ad demand hits revenue

ITV has forecast a larger than expected fall in advertising revenue in the first half of the year, blaming Brexit, a lack of World Cup football and the timing of Easter.

The Love Island broadcaster said it was forecasting half-year advertising revenues to tumble by 6%.

That was because Brexit uncertainty hit business confidence in the first quarter, with ad sales falling by 7%.

Total revenues fell by 4% to £743m – with a 1% increase in ITV Studios revenue helping offset the ad sales decline.

The ad figures were slightly worse than analysts had expected and shares were almost 5% down in morning deals and flat on the year to date.

The company said ad revenues fell as much as 16% in March alone and would likely decline by around 20% in June as it faces up to a tough comparison with the same month a year ago when it booked ad revenue from the World Cup in Russia.

Easyjet's chief executive, Carolyn McCall
Image: Carolyn McCall was easyJet’s chief executive before making the switch to ITV

Despite the downbeat advertising expectations, chief executive Carolyn McCall insisted the first quarter performance was “very much as we expected” with full-year guidance still on track.

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She pointed to strong online revenues and line-up of shows – such as the return of Love Island, the dating reality show.

She told investors: “We remain confident that we will deliver good organic revenue growth in ITV Studios over the full year and have already secured over £120m more revenue for 2019 than at the same time last year.”

In the trading update, ahead of its AGM, ITV also confirmed it remained on track to launch its new streaming service BritBox – the BBC and ITV’s answer to Netflix in the UK – in the second half of the year.

Neil Wilson, chief market analyst at Markets.com, said ITV had learned the value of content to its business.

But he added: “As diversified as ITV is these days, its dependence on highly cyclical ad revenues remain high and income from Studios is not as profitable nor as reliable.

“BritBox, due to launch in H2, seems a little late to the party and will struggle to deliver the depth of content to compete for eyeballs.

“Shares have not done well under McCall, she may start to come under pressure before long if things don’t turn around.

“One wonders if there is yet scope for a bid for ITV from a third party,” he concluded.

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