ITV presented its Q3 Trading Update for the nine months to 30 September 2022. The financial and operating performance for the nine months to 30 September included a total external revenue up 6% at £2,523 million (2021: £2,381 million) and a total non-advertising revenue up 13% at £1,619 million (2021: £1,432 million), representing over 50% of total revenue, as we continue to grow and diversify the business.
"ITV has performed strongly, delivering a 6% increase in total revenue for the first nine months of the year, driven by double-digit growth in both digital revenue and revenue from ITV Studios," Carolyn McCall, ITV Chief Executive, said.
ITV Studios had total revenue up 16% at £1,387 million (2021: £1,193 million), growing ahead of the market, and delivered a wide range of new and returning programs and formats in the UK and internationally, including "A Spy Among Friends," "Hell's Kitchen USA," "Let The Right One In" and "The Voice Germany." "ITV Studios continues to outperform the growing content market and will exceed 2019 revenues in 2022. It's on track to deliver on all of its KPI targets and has a formidable slate to power it into 2023 as we further diversify the business by genre, geography, and customer," McCall stated.
ITV Media & Entertainment (M&E) revenue was down 2% at £1,561 million (2021: £1,594 million), with total advertising revenue (TAR) down 2%, broadly as expected, against tough comparatives. Against 2019 TAR was up 6%; within this, digital advertising revenue remains strong, up 13% at £227 million to the end of September, compared to the same period in 2021. Total M&E non-advertising revenue for the nine months to the end of September 2022 was down 3%, with good growth in subscription revenue offset by the expected decline in SDN revenue and interactive revenues against tough comparatives in 2021. M&E's KPIs demonstrate good strategic progress, with total digital revenues up 15% and total streaming hours broadly flat as the company prioritizes content on our own platforms to drive effective monetization. Monetizable streaming hours on ITV Hub, ITV Hub+, and BritBox UK were up 10% in the nine months to 30 September 2022. At the same time, we maintained our strength in delivering mass reach with 93% of the top 1,000 commercially broadcast TV programs and by maintaining our share of commercial viewing on our channels.
ITVX will be rolled out across devices and platforms in the coming weeks, with the full launch of new and exclusive content on 8 December. It will launch with over 10,000 hours of free content available, one of the UK's largest free film libraries with over 250 titles and over 200 series available at launch 20 FAST (free ad-supported TV) channels and ITV's six linear channels. ITVX will enable ITV to continue to provide the most extensive free ad-funded premium streaming service in Europe by revenue. ITV TAR for the full year 2022 is expected to be down between 1% and 1.5% on 2021's record year, and this will represent high single-digit revenue growth compared to 2019. In Q4, ITV will broadcast the FIFA World Cup, which will benefit TAR in November and December. "We are making good progress on our new, free, ad-funded streaming service ITVX, which will be rolled out across devices and platforms in the coming weeks with the full launch of new and exclusive content on 8 December, in time to reach millions of viewers who will come to ITV for the FIFA World Cup. ITVX will supercharge our streaming business, providing viewers with a content-rich destination rather than a catch-up service and advertisers with valuable addressable audiences at scale. This will drive significant digital viewing and revenue growth, enabling ITV to deliver at least £750 million in digital revenues by 2026," McCall said.
ITV Studios will exceed 2019 revenues in 2022 with an exciting pipeline of scripted and unscripted programs as it further diversifies the business by genre, geography, and by a customer and grows ahead of the market. With a strong position in a growing market, ITV Studios expect to deliver revenue growth over our 5% medium-term target in 2023. ITV remains committed to providing ITV Studios adjusted EBITA margin guidance of 13% to 15% from 2023. The company expects 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
In 2022, given the nature of ITV's cost base and mitigations already in place, ITV expects to be able to manage inflation. For 2023, continued higher inflation rates will impact the cost base, although the company is looking carefully at further mitigation measures. Overall, despite the current macro and geopolitical uncertainty, ITV is making significant strategic progress and is well positioned to deliver Phase 2 of the "More Than TV" strategy through growing ITV Studios and having at least £750 million of digital revenues in M&E by 2026 and creating long-term value for shareholders.
ITV's balance sheet is robust, enabling the company to invest in digital acceleration and deliver returns to shareholders in line with our capital allocation policy. "While we remain mindful of the macroeconomic and geopolitical uncertainty, there's strong operational momentum across both our Studios and Media & Entertainment divisions as we continue to build a resilient, diversified business that can take advantage of the global growth in the demand for quality content and the desire of advertisers for both mass reach and data-led addressable advertising, targeting millions of UK viewers," McCall added.
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