ITV seeks cost savings as COVID-19 delivers blow

UK commercial broadcaster ITV is to seek further cost savings after seeing its Q2 and H1 revenues and EBITA plummet under the impact of COVID-19 on advertising and making, but has seen viewing numbers and streaming users increase.

Carolyn McCall

Broadcast revenue dropped by 17% in the first six months under the impact of a 43% decline in advertising revenue in Q2. Production arm ITV Studios saw its first half revenues drop by 17% due to the lockdown in production activity over the period. Overall, ITV’s revenues also dropped by 17% for the first half, taking its total to £1.218 billion (€1.348 billlion. Adjusted EBITA for the period was down 50% to £165 million.

On a more positive note, ITV Total viewing was up 4% and ITV Family light viewing was up 8% in spite of the strong growth in streaming, with online viewing up 13% and dwell time up 11%.

ITV said it had targeted an additional r £25 million to £30 million of permanent overhead cost savings by 2022 on top of the £60 million targeted for this year, £51 million of which have been realised. The group also said it was looking at ways of permanently reducing its cost base.

CEO Carolyn McCall said that “this has been one of the most challenging times in the history of ITV” but noted that the company’s digital strategy was paying dividends.

“While our two main sources of revenue – production and advertising – were down significantly in the first half of the year and the outlook remains uncertain, today we are seeing an upward trajectory with productions restarting and advertisers returning to take advantage of our highly effective mass reach and addressable advertising platform, in a brand safe environment We have made good progress in our digital transformation. The majority of our colleagues are working seamlessly at home thanks to the investment we have made in technology and systems and this has helped us continue to deliver on our strategic objectives,” she said.

“The success of the Hub investment plan contributed to driving online viewing up 13% and monthly active users up 15% in H1. We continue to successfully roll out Planet V [a programmatic advertising platform] with around 35% of our VOD inventory now delivered through this platform, which is on track to be live with most of the major agencies by the end of the year. BritBox [ITV’s streaming JV with the BBC] is ahead of target on subscribers in the UK and we have announced plans to roll out BritBox internationally. The future is still uncertain due to the pandemic but the action we have taken to manage and mitigate the impact of COVID-19 puts us in a good position to continue to invest in our strategy of transforming ITV into a digitally led media and entertainment company.”

Paolo Pescatore, tech, media and telco analyst, PP Foresight, said that Q2 had been “a tough period for ITV given the pandemic”.

“The slump in revenue was expected. Hopefully the company has weathered the brunt of the storm. Challenging times still lie ahead,” he said.

“There are encouraging signs with a return of production and the growth of direct-to-consumer services. The BritBox launch in other markets will provide much needed revenue. The pandemic has underlined the importance of streaming and connecting with audiences with new ways. This is something that ITV and other broadcasters need to accelerate.”