TIDMITV
RNS Number : 7069S
ITV PLC
08 November 2023
ITV plc Q3 Trading Update for the nine months to 30 September
2023
Carolyn McCall, ITV Chief Executive, said:
"ITV continues to make good strategic progress despite the
challenging macro environment which is impacting the advertising
market and also the demand for content from free-to-air
broadcasters in the UK and internationally.
"Studios and M&E digital revenues both grew strongly in the
nine months to the end of September, more than offsetting the
expected decline in linear advertising, delivering total group
revenue growth of 1%.
"ITV Studios grew faster than the market, with 9% revenue
growth, driven by its position as a scaled and diversified global
production business.
"ITVX had a successful nine months delivering 27% growth in
total streaming hours which, in turn, helped deliver 23% growth in
digital revenue. Growth in digital advertising revenues continues
to outperform other broadcasters reflecting ITVX's compelling
viewer and advertising proposition.
"We are on track to deliver GBP15 million of cost savings in
2023, as part of our previously announced GBP50 million cost saving
target between 2023 and 2026. In addition, we will rephase GBP10
million of content spend from 2023 into 2024.
"It is evident that our strategy of growing the Studios and
M&E digital business is helping ITV to offset the current
headwinds and we remain confident in delivering our 2026 targets,
when we expect two-thirds of revenue to come from these growth
drivers.
Group revenue and operating performance as expected with strong
growth in ITV Studios and M&E digital revenue for the nine
months to 30 September 2023
-- Total revenue was up 1% at GBP2,975 million (2022: GBP2,948
million), with growth in ITV Studios and M&E digital revenues
more than offsetting the decline in linear advertising revenue as
we continue to diversify the business. Total external revenue was
flat at GBP2,532 million (2022: GBP2,523 million)
ITV Studios
-- Total ITV Studios revenue was up 9% at GBP1,516 million (2022: GBP1,387 million)
-- ITV Studios delivered a wide range of new and returning programmes and formats in the UK and internationally as it continues to diversify by genre, geography and customer
-- including Fifteen Love for Amazon Prime; Love Island USA S5
for Peacock; and World on Fire S2 for the BBC
Media & Entertainment (M&E)
-- M&E revenue was down 7%, as expected, at GBP1,459 million
(2022: GBP1,561 million) driven by total advertising revenue (TAR)
down 7%
-- Digital advertising revenue (a component of digital revenue)
remained strong, up 25% at GBP283 million to the end of September
(2022: GBP227 million)
-- Total M&E non-advertising revenue was down 3% with good
growth in subscription revenue offset by the expected decline in
SDN revenue
-- ITVX continued to perform strongly. Total digital revenues
(see note 4) were up 23% and total streaming hours were up 27% to
the end of September with monthly active users continuing to grow
in line with our expectations
-- We maintained our strength in delivering mass reach for
advertisers through the quality and breadth of our schedule with
Love Island, the Women's Football World Cup and the Rugby World Cup
all drawing large broadcast and streaming audiences
Outlook
ITV Studios
-- We expect ITV Studios to deliver total organic revenue growth
of at least 5% per annum on average to 2026 and to grow ahead of
the market as we further strengthen the business
-- We continue to expect good global demand for ITV's high
quality content over the medium term. In the shorter term, the
global content market has been impacted by lower demand from
free-to-air broadcasters, reflecting the challenging advertising
environment, as well as the US writers' and actors' strike. The
latter is expected to defer revenues from 2024 into 2025
-- Over the full year 2023, we expect to deliver around 3%
growth in total Studios revenue, following 19% growth in 2022. On
an organic basis, we expect average growth over 2022 and 2023 to be
well ahead of our medium term target and the wider market
-- Q4 2023 is impacted by the phasing of deliveries in 2023
which are weighted to the first nine months, including big budget
programmes such as Franklin and Physical S3, both for AppleTV+
-- We are committed to maintaining an adjusted EBITA margin for
ITV Studios of 13% to 15% over the period to 2026
Media & Entertainment
-- With the continued successful performance of ITVX, we remain
confident in delivering at least GBP750 million of digital revenues
by 2026
-- The advertising market remains challenging and over the full
year 2023 we expect ITV TAR to be down around 8% versus 2022 TAR,
which was the second highest in ITV's history and included the
positive impact of the FIFA World Cup
-- In light of these conditions, total content spend for the
full year will be GBP10 million lower than previously guided at
around GBP1,290 million as we rephase content into 2024
-- We welcome the inclusion of the Media Bill in the King's
Speech, as the UK Government sets out its legislative agenda for
the forthcoming year. The draft Media Bill set out the Government's
intention to update and reform the legal and regulatory framework
for television, particularly delivered online. This should ensure
that the content from the public service broadcasters, including
ITV, will be included in prominent positions on streaming
platforms
ITV has made good strategic progress in the nine months to 30
September 2023 driven by strong execution and we are on track to
deliver all our KPI targets by 2026.
We continue to review our cost base in order to deliver further
savings, in addition to our current GBP50 million target to
2026.
Our 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.
NOTES TO EDITORS
1. Unless otherwise stated, all financial and operating figures
refer to the nine months ended 30 September 2023, with growth
compared to the same period in 2022.
2. Group revenue performance
Revenue for nine months to Change Change
30 September (GBPm) 2023 2022 GBPm %
============================ ====== ====== ======= =======
Media and Entertainment 1,459 1,561 (102) (7)
============================ ====== ====== ======= =======
ITV Studios 1,516 1,387 129 9
============================ ====== ====== ======= =======
Total revenue 2,975 2,948 27 1
============================ ====== ====== ======= =======
Internal supply (443) (425) (18) (4)
============================ ====== ====== ======= =======
Total external revenue 2,532 2,523 9 -
============================ ====== ====== ======= =======
Revenue for nine months to Change Change
30 September (GBPm) 2023 2022 GBPm %
============================ ====== ====== ======= =======
Total advertising revenue 1,233 1,329 (96) (7)
============================ ====== ====== ======= =======
Non-advertising revenue 1,742 1,619 123 8
============================ ====== ====== ======= =======
Internal supply (443) (425) (18) (4)
============================ ====== ====== ======= =======
Total external revenue 2,532 2,523 9 -
============================ ====== ====== ======= =======
3. Total advertising revenue (TAR), which includes ITV Family
NAR, digital advertising and sponsorship, was down 7% over the nine
months to the end of September. Q3 was up 1%, with July down 3%,
August up 7% and September flat compared to the same periods in
2022. TAR is forecast to be down around 8% over the full year with
October up 2%, November expected to be down around 15% and December
expected to be down around 10% to 15% compared to the same periods
in 2022 which included the positive impact of the FIFA World Cup.
Figures for ITV plc for November and December are based on ITV
estimates and current forecasts.
4. Media and Entertainment key performance indicators
Absolute Change
Nine months to 30 September 2023 2022 change %
=============================== ======== ======== ========= ==========
Total digital revenue (GBPm) GBP340m GBP276m GBP64m 23%
=============================== ======== ======== ========= ==========
Total streaming hours (hrs) 1,096m 863m 233m 27%
=============================== ======== ======== ========= ==========
Share of commercial viewing
(SOCV) 32.8% 33.2% - (0.4%pts)
=============================== ======== ======== ========= ==========
Share of top 1,000 commercial
broadcast TV programmes 93% 93% - -
=============================== ======== ======== ========= ==========
-- Total digital revenue includes revenue from digital
advertising, subscriptions, linear addressable advertising, digital
sponsorship and partnerships, ITV Win and any other revenues from
digital business ventures.
-- Total streaming hours is the total number of hours viewers
spent watching ITV across all streaming platforms, reported at a
device level. This figure includes both ad-funded and subscription
streaming. In Q3 YTD 2022, total streaming hours were reported as
813 million hours, which included some estimates of total streaming
viewing from third party data providers and has been updated to
reflect more recently available and accurate data
-- ITV Family share of commercial viewing is the total viewing
of audiences over the period achieved by ITV's family of channels
as a proportion of all ad-supported commercial broadcaster viewing
in the UK. ITV Family includes ITV, ITV2, ITV3, ITV4, ITVBe, CITV,
ITV Breakfast, CITV Breakfast and associated "HD" and "+1"
channels.
-- The share of top 1,000 commercial broadcast TV programmes KPI
includes TV viewing from transmission and seven days
post-transmission on catch up, as well as six weeks prior to the
transmission window. It excludes programmes with a duration of
<ten minutes. This metric is calculated as a 12-month rolling
average to normalise seasonal scheduling
-- % change for performance indicators is calculated on rounded numbers.
5. Total Studios organic revenue at constant currency was up 7%
to GBP1,468 million for the first 9
months of 2023. The unfavourable translation impact of foreign
exchange on total revenue over
the period was GBP4 million. Our definition of constant currency
assumes exchange rates remain
consistent with 2022.
6. ITV continues to have good access to liquidity. At 30
September 2023, net debt ([1]) was GBP739 million (30 June 2023:
GBP724 million). ITV had total liquidity of GBP962 million,
comprising total cash of GBP232 million and committed undrawn
facilities of GBP730 million.
The Group's EUR259 million Eurobond maturing in December 2023
will be refinanced by drawing on a GBP230 million committed
four-year term loan, maturing in July 2027. The term loan has the
same financial covenants as ITV's Revolving Credit Facility and is
excluded from the total committed undrawn facilities of GBP730
million.
7. The net pension surplus of the defined benefit schemes at 30
September 2023 on an accounting basis was GBP225 million (30 June
2023: GBP235 million surplus).
The Triennial Valuation as at 31 December 2022 is currently
underway.
8. Figures presented in this Trading Statement are not audited.
This announcement contains certain statements that are or may be
forward looking statements. Words such as "targets", "expects",
"aim", "anticipate", "intend", or the negative of these terms and
other similar expressions of future performance or results, and
their negatives, are intended to identify such forward-looking
statements. These forward-looking statements are based upon current
expectations and assumptions regarding anticipated developments and
other factors affecting ITV. Although ITV believes that the
expectations reflected in these forward-looking statements are
reasonable, it can give no assurance that these expectations will
prove to have been correct. By their nature forward looking
statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future.
They are not historical facts, nor are they guarantees of future
performance; actual results may differ materially from those
expressed or implied by these forward-looking statements. There are
a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by such forward looking statements. These factors include, but are
not limited to (i) the general economic, business, political,
regulatory and social conditions in the key markets in which the
Group operates, (ii) a significant event impacting ITV's liquidity
or ability to operate and deliver effectively in any area of our
business, (iii) a major change in the UK advertising market or
consumer demand, (iv) significant change in regulation or
legislation, (v) a significant change in demand for global content,
and iv) a material change in the Group strategy to respond to these
and other factors. Certain of these factors are discussed in more
detail elsewhere in this announcement and in ITV's 2022 Annual
Report and Accounts including, without limitation, in ITV's
approach to risk management.
Forward-looking statements speak only as of the date they are
made and, except as required by applicable law or regulation, ITV
undertakes no obligation to update any forward-looking statements,
whether written or oral that may be made from time to time, whether
as a result of new information, future events or otherwise. Nothing
in this statement should be construed as a profit forecast.
For further enquiries please contact:
Investor Relations
Pippa Foulds +44 7778 031097
Faye Dipnarine +44 2071 576581
Media Relations
Paul Moore +44 7860 794444
Laura Wootton +44 7917 862293
([1]) Net debt is defined as total loans and facilities
(including cross currency interest rate swaps held against
euro-denominated borrowings) and lease liabilities less total cash
and cash equivalents and restricted cash.
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