Recently, ITV released its Q3 trading update for 2024, covering performance for the nine months ending September 30. The results reflect ITV’s strategic focus on growing digital revenue and managing cost efficiencies amid external challenges, including the U.S. writers' and actors' strikes and a softer market for free-to-air broadcasters.
ITV Studios' revenue declined by 20% year-to-date, totaling £1,217 million compared to £1,516 million in the previous year. This downturn was attributed primarily to delayed production schedules, which were heavily weighted towards Q4, and the 2023 U.S. writers' and actors' strikes. Despite this impact, ITV expects to achieve record adjusted EBITA for 2024, driven by operational efficiency improvements and significant program deliveries in Q4. Notable upcoming productions include “The Better Sister” for Amazon Prime Video and “Hell’s Kitchen” for Fox in the U.S., as well as “Shetland” and “Grace” in the U.K.
The company projects total Studios revenue to decline slightly by mid-single digits for the full year but anticipates a return to growth in 2025 and 2026, with targeted average annual revenue growth of 5% over five years and profit margins within the 13-15% range.
MEDIA & ENTERTAINMENT (M&E) SECTOR INSIGHTS
ITV’s Media & Entertainment segment reported a 4% revenue growth to £1,524 million for the nine-month period, supported by a 6% increase in total advertising revenue (TAR). Digital advertising performed strongly, rising by 15%, while non-advertising revenue declined by 7% as expected.
ITVX, ITV's digital streaming platform, contributed substantially to growth, achieving a 14% increase in total streaming hours and 11% rise in digital revenue. ITVX attracted viewers with popular programs such as “Love Island,” “The Tower,” and “Douglas Is Cancelled,” and it is expected to play a key role in ITV’s target of reaching £750 million in digital revenue by 2026.
AD REVENUE
While Q3 advertising revenue was stable, ITV anticipates a dip of 6-7% in Q4, influenced by the comparative impact of the 2023 Rugby World Cup and uncertainty around the UK budget. Despite this, ITV expects total advertising revenue for 2024 to rise by approximately 2.5% over 2023 levels.
ITV has also implemented further cost-saving measures, announcing an additional £20 million in net savings for 2024. This includes reductions in content costs and accelerating planned 2025 savings. Combined with previous initiatives, ITV aims to achieve £40 million in savings for the year through restructuring and enhanced efficiency.
As of September 30, 2024, ITV’s net debt stood at £437 million, benefiting from proceeds of the BritBox International sale, which supported a £235 million share buyback. ITV’s liquidity position remains strong, with access to £1,326 million, comprised of £426 million in cash and £900 million in undrawn facilities. Additionally, the company secured a new £200 million loan facility maturing in December 2030, further strengthening its financial flexibility.
Carolyn McCall, ITV Chief Executive, said: "ITV's good strategic progress has continued in the first nine months of 2024 driven by strong execution and industry leading creativity.” The executive expressed confidence in ITV’s strategic execution, driven by strong content, expanding digital reach, and rigorous cost management: "ITV Studios is performing well despite the expected impact of both the writer's strike and a softer market from free-to-air broadcasters. ITV Studios has had an excellent start to Q4, in line with expectations, which will ensure it achieves record profits in 2024. Studios has great creative and commercial momentum as demonstrated in the last few weeks with shows including Rivals for Disney+ and Ludwig for the BBC and is on track to deliver good revenue growth in 2025 and 2026. ITVX continued its strong performance, delivering double-digit growth in streaming hours and digital revenues. ITV maintained its unique position in linear television through the quality and breadth of its schedule, and ITV1 was voted Channel of the Year at the Edinburgh TV Awards.”
Finally, McCall concluded: "Our cost saving programme is progressing well and today we are announcing further cost savings in addition to the previously announced £40 million of incremental cost savings through restructuring, improved efficiency and simplifying ways of working. Coupled with our strategic delivery and revenue outlook, this continues to give us the confidence that we will deliver an increase in group profit this year."
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