ITV presented the interim results for the period ended 30 June 2023, highlightening a good strategic progress and strong execution, with financial performance as expected with ITV Studios revenues up 8% and digital revenue up 24%. Total external revenue was down 2% at £1,639 million, with growth in ITV Studios and digital revenues largely offsetting the decline in linear advertising revenues. Total ITV Studios revenue up 8% to £1,000 million, driven by the UK and Media & Entertainment (M&E) revenue down 9% at £964 million, with total advertising revenue (TAR) down 11% as guided. Within this, digital advertising revenue was up 24% to £179 million. Group adjusted EBITA was down 52% at £152 million, as expected. This reflects the challenging advertising market and the planned investment in ITVX. Adjusted EPS1 was down 62% at 2.3p. EBITA2 was £133 million (30 June 2022: £295 million). Statutory profit before tax was £45 million (30 June 2022: £219 million) and statutory EPS was 1.0p (30 June 2022: 4.8p) Strong revenue growth of 8%, ahead of the market with an industry leading adjusted EBITA margin1 of 13%, which is within the target range.
“The continued momentum behind ITV’s strategic transformation delivered strong growth in Studios and Digital revenues in the first half of the year, largely offsetting the expected weakness in the UK advertising market - with total revenue declining just 1% in H1, even in a very tough advertising market. ITV Studios increased revenue by 8%, reaching £1 billion in H1 for the first time with strong and growing global demand for ITV’s content. ITVX drove an increase in digital revenue of 24%, ahead of plan, supported by a step change in our viewer metrics, with more viewers watching more content and staying longer," Carolyn McCall, ITV Chief Executive, said.
Studios KPI performance in the first half as expected and remains on track to deliver targets: 109 high-end scripted hours, which is down over the first half as a result of the phasing of deliveries (30 June 2022: 133 hours). Scripted revenue per hour has increased year on year in H1. Over the full year, high-end scripted hours are expected to be up year-on-year, based on the current delivery plan. Nine formats were sold in three or more countries, as our programmes continue to travel, including "The Voice," "Love Island," "My Mum, Your Dad," and "Come Dine With Me" (30 June 2022: 9 formats). Over the full year, ITV expect this to be broadly in line with 2022. Percentage of total Studios revenue from streaming platforms grew to 27% with commissions or development deals with most of the major streamers (30 June 2022: 19%). ITV Studios has a high level of committed revenues for the full year of 89% (2022: 90%), supported by a strong pipeline of new and returning programs. With the successful integration of recent acquisition, Plimsoll Productions, original commissions such as "A Year on Planet Earth" on ITVX and ITV1 and "Big Beasts" on AppleTV+ have been delivered.
“ITV maintained its strength in linear in a challenging advertising market. Looking forward we see a more encouraging outlook as advertisers build their campaigns around the large streaming and linear audiences expected to be drawn to the Women's World Cup, the Rugby World Cup and the eagerly anticipated return of 'Big Brother.' We remain on track to achieve all our KPI targets which gives us confidence we will deliver at least £750m of digital revenue by 2026. As we said at the full year results in March, 2023 is the year of peak net investment in our streaming business and we expect profit to grow from here," Carolyn McCall addded.
On Media & Entertainment (M&E) ITVX is driving a step change in key viewing metrics and strong growth in digital advertising revenue, up 24%. M&E financial performance is as expected with revenue down 9% at £964 million reflecting the impact of the challenging advertising market, with TAR down 11% as guided. ITVX's strong performance has continued. The planned investment in content is attracting increased users, who are watching more and staying for longer compared to ITV Hub in 2022. Monthly active users were up 29% to 12.5 million and total streaming hours increased 33% to 737 million hours driving strong growth in digital revenues up 24% to £218 million. Planet V, continues to see strong demand for data-driven, targeted advertising benefitting from the increased scale of online inventory on ITVX driving digital advertising revenue up 24% in H1 to £179 million. ITV have maintained our unique position in linear through the quality and breadth of our schedule with: 33.6% share of commercial viewing (SOCV) (2022: 33.7%) and 93% of top 1,000 commercial broadcast TV programmes (2022: 94%). M&E adjusted EBITA3 was £23 million as expected, reflecting the challenging advertising market and the planned investment in ITVX (30 June 2022: £194 million).
ITV expect ITV Studios to deliver at least 5% average organic revenue growth per annum to 2026, having grown organically at 8% on average for the 18 month period from 1 January 2022 to 30 June 2023. ITV also expect to grow ahead of the market as we continue to strengthen the business, against the background of strong global demand for our content. In 2023, the comapany are on track to deliver mid-single digit revenue growth, ahead of the market. ITV is committed to maintaining an adjusted EBITA margin for ITV Studios of 13% to 15% over the period to 2026. As previously guided, we expect the margin to be at the lower end of the range in the shorter term as a result of the current inflation in the production market.
With the successful performance of ITVX, ITV remain confident in delivering at least £750 million of digital revenues by 2026. The company is looking forward to the second half of 2023 with the Women’s Football World Cup, the Rugby World Cup and "Big Brother," all set to draw large broadcast and streaming audiences. Compared to the same period in 2022, TAR is expected to be down 4% in July 2023 and up 7% in August. It is too early to give a forecast for September but early signs are positive and we expect to see growth in TAR in Q3, with continued strong growth in digital advertising revenues. ITV remain committed to delivering £15 million of permanent cost savings in 2023 as part of our previously announced £50 million cost saving target between 2023 and 2026. £11 million of this was delivered in H1. This is in addition to the £106 million cost programme delivered between 2018 and 2022.
ITV has made really good strategic progress in the first half of 2023 driven by strong execution and we enter the second half of the year with real momentum and are on track to deliver all our KPI targets by 2026. While linear will continue to have an important role in the advertising mix, by 2026 ITV expect around two-thirds of ITV’s total revenues to come from our growth drivers – ITV Studios and M&E digital revenues. This is expected to drive increased profits from 2023, which is the year of peak net investment in our streaming business. The balance sheet is robust which enables ITV to invest behind our strategic priorities and deliver returns to shareholders in line with our capital allocation policy.