ITV Faces 61% Profit Decline Amid Advertising Challenges and Streaming Investments
ITV has reported a 61% decrease in profits for 2023, amounting to £193 million. This decline was primarily attributed to the challenges faced in the traditional advertising market and the continued funding of its streaming platform, ITVX.
The broadcaster’s overall income decreased by 2% to £4.3 billion, and external income also fell by 3% to £3.6 billion.
On a brighter note, ITV Studios gained a 4% increase in revenue to £2.2 billion, and digital revenues jumped by 19% to £490 million. ITVX witnessed a 19% increase in monthly users and a 26% rise in total streaming hours.
Carolyn McCall, the CEO of ITV, shared, “In 2023, we saw the benefit of the actions we have taken to reposition ITV towards higher sustainable growth. Our Studios business recorded the highest-ever revenues and profits, and in its first year, ITVX delivered strong growth in viewing and digital revenue with investment in the plan. This growth in production and Streaming substantially offset the challenging linear TV advertising market conditions.”
She continued, “We remain confident in delivering our KPI targets and are making good progress towards these – most notably ITV Studios organic revenue growth of 5 per cent on average per annum between 2021 and 2026 at a margin of 13 to 15 per cent and to deliver at least £750 million of digital revenues by 2026.”
In terms of creating value for shareholders, McCall confirmed, “We remain firmly committed to creating shareholder value and applying a disciplined approach to capital allocation. As announced on 1 March 2024, we will return the entire net proceeds of the sale of BritBox International through a share buyback of £235 million, and the Board has proposed a final dividend of 3.3p giving an ordinary dividend of 5.0p per share or c.£200 million, for the full year.”
She also touched on cost-saving measures, “Our existing cost-saving programme targeting £150 million between 2019 and 2026 has delivered £130 million of annualised savings to date. We are on track to deliver the full £150 million by 2025 – one year early. In addition, we are now in the early stages of a new strategic restructuring and efficiency programme across the Group to reshape the cost base, enhance profitability, and support the growth drivers of Studios and Streaming. By the end of 2024, we expect the programme to have delivered incremental annualised gross savings of at least £50 million per year, giving a £30 million in-year gross benefit in 2024. The ongoing programme is designed to deliver further material incremental savings over several years.”
Ending her statement, McCall expressed confidence in ITV’s future growth, “2023 was the year of peak investment for Streaming, which together with the successful execution of our strategy and the efficiencies delivered to date have made ITV more robust. ITV has a leading, scaled, global studio business, a high-growth streaming service, and a cash-generative linear advertising business. This ensures that we are well-placed to grow profits from here as we continue to drive material efficiencies, invest behind our strategic priorities and deliver returns to shareholders.”
Ragul Thangavel
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