ITV
plc Q1 Trading Update for the three months to 31 March
2024
Q1
2024 Highlights
●
ITV continues to make good
progress and remains on track to deliver its 2026 KPI
targets
●
Total ITV Studios Q1 revenue was
down 16%, reflecting the phasing of deliveries and the expected
impact of the US writers' and actors' strike
●
Total ITV Studios revenue for FY24
is expected to be broadly flat with a strong pipeline of programmes
heavily weighted to H2
●
ITVX continued to perform strongly
with 16% growth in streaming hours and 14% growth in digital
advertising revenues in Q1
●
Total advertising revenue up 3% in
Q1, with strong momentum into Q2, expected to be up around
12%; H1 expected to be up around 8%
●
ITV Pension scheme in surplus
following latest triennial valuation; removes a significant
historic drag on free cash
Carolyn McCall, ITV Chief Executive, said:
"ITV continues to execute its
strategy successfully.
"Over the full year we expect ITV
Studios revenues to be broadly flat. We have a strong pipeline of
programmes, good demand for our quality content as we increasingly
diversify our customer base towards streamers and the phasing of
deliveries is heavily weighted to the second half of the year,
including Hells Kitchen US, The Better Sister, A.C.A.B, Showtrial
and Ludwig.
"ITVX continued to build on its
strong first year and delivered double-digit growth in both digital
viewing and digital advertising revenues in Q1 and we expect
continued strong growth in both throughout the year.
"Total advertising revenue grew 3%
in Q1, in line with guidance, with good momentum continuing into Q2
benefitting from the Euros in June. H1 TAR is expected to be up
around 8%.
"Our group cost savings programmes
are on course to deliver £40 million of savings this year as
previously guided. Overall we expect to continue to make good
strategic progress and we remain on track to achieve our KPI
targets for 2026."
Financial and operating performance for the three months to 31
March
● Total
revenue was down 7% at £887 million (2023: £952 million), with
growth in total advertising revenue (TAR) offset by the decline in
ITV Studios revenue
● Total
external revenue was down 6% at £727 million (2023: £776
million)
ITV
Studios
● Total ITV
Studios revenue was down 16% at £382 million (2023: £457 million)
due to the phasing of deliveries which are heavily weighted to H2
and the expected impact from both the 2023 US writers and actors
strikes and the weaker demand from free-to-air broadcasters in
Europe who have been holding back spend until they see more
certainty in the advertising market
● ITV
Studios delivered a wide range of new and returning programmes and
formats in the UK and internationally during the quarter,
including
○ The
Reluctant Traveller for Apple TV+, The Red King for Alibi, The
Gathering for Channel 4 and I'm A Celebrity…Get Me Out Of Here! in
Germany for RTL
Media & Entertainment (M&E)
●
M&E revenue was up 2% at £505 million (2023:
£495 million), with total advertising revenue (TAR) up 3% as
previously guided
○
Within this digital advertising revenue (a component of digital
revenue) was up 14%
○
Total M&E non-advertising revenue was down 5% driven by the
expected decline in partnership revenue as we improve the viewer
proposition and our monetisation of ITVX
● ITVX's
strong performance has continued in Q1 with total streaming hours
up 16% and monthly active users continue to grow in line with our
expectations
● Digital
revenues (refer to Note 4) grew 11% with strong growth in digital
advertising revenues partly offset by the short term impact of the
actions we have taken to simplify our paid streaming
proposition
● We
maintained our strength in delivering mass reach for our
advertisers, with 91% of the top 1,000 commercially broadcast TV
programmes and 33.7% share of commercial viewing on our linear
television channels
ITV
Pension Scheme: Following the
agreement of the latest triennial valuation we expect no future
deficit contributions while the Scheme is in surplus, other than a
small payment relating to a legacy asset-backed scheme. This
removes a significant historic drag on free cash (refer to Note 6
for further details).
Outlook
With the continued strong strategic
progress we are making, we remain on track to deliver our 2026 KPI
targets.
As previously guided we expect to
deliver a total of £40 million of cost savings in 2024 - made up of
£10 million from our 2019 to 2025 cost savings programme and £30
million of additional in-year savings as part of our strategic
restructuring and efficiency programme which we announced as part
of the 2023 full-year results and are already executing
upon.
ITV
Studios:
● We expect
ITV Studios total revenues to be broadly flat over the full year
2024 with good underlying growth offsetting the impact of the US
writers and actors strikes which, as previously guided, will delay
around £80 million of revenue from 2024 to 2025. Q2 will also see
revenue decline year on year but we have a strong pipeline of
programmes with deliveries heavily weighted to H2 including Hells
Kitchen US for Fox, A.C.A.B for Netflix, The Better Sister and
Lazarus for Amazon Prime Video, Ludwig and Showtrial for the BBC,
Sentinelles for OCS and Canal+, Love Island in the UK, US and
Australia, and The Voice in Australia and Germany
● ITV
Studios remains on track to deliver total organic revenue growth of
5% on average per annum from 2021 to 2026 - ahead of the market,
and at a margin of 13 to 15%
● We are
confident that we will continue to grow our market share to 2026
driven by our scale; our diversification by customer,
geography and genre; a strong track record of high-quality content;
a strong slate for 2024 and beyond; and our leading creative
talent
Media & Entertainment
● We remain
on track to deliver at least £750 million of digital revenues by
2026
● ITVX has
started the year strongly and we will continue to build on its
successful launch year through further developments in content,
product, distribution and marketing
●
Compared to the same period in 2023, TAR is
expected to be up around 12% in Q2 and up around 8% in H1 2024
benefitting from the Euros in June, with continued strong growth in
digital advertising revenues
Notes to editors
1. Unless otherwise stated, all financial and operating figures
refer to the three months ended 31 March 2024, with growth compared
to the same period in 2023.
2. Group financial performance
Revenue for three months to 31 March (£m)
|
2024
|
2023
|
Change
£m
|
Change
%
|
Media and Entertainment
|
505
|
495
|
10
|
2
|
ITV Studios[1]
|
382
|
457
|
(75)
|
(16)
|
Total revenue
|
887
|
952
|
(65)
|
(7)
|
Internal supply
|
(160)
|
(176)
|
16
|
(9)
|
Total external revenue
|
727
|
776
|
(49)
|
(6)
|
Revenue for three months to 31 March (£m)
|
2024
|
2023
|
Change
£m
|
Change
%
|
Total advertising revenue
|
432
|
419
|
13
|
3
|
Non-advertising revenue
|
455
|
533
|
(78)
|
(15)
|
Internal supply
|
(160)
|
(176)
|
16
|
(9)
|
Total external revenue
|
727
|
776
|
(49)
|
(6)
|
3. Total advertising revenue (TAR), which includes ITV Family
NAR, digital advertising and sponsorship, is expected to be up
around 12% in Q2 with continued strong growth in digital
advertising revenues and will be up around 8% for the first half of
2024. Figures for ITV plc are based on ITV estimates and current
forecasts.
4. Key performance indicators
Three months to 31 March
|
2024
|
2023
|
Change
%
|
ITV Studios total organic revenue
growth
|
(15%)
|
(9%)
|
(6%
pts)
|
Total digital revenue
|
£118m
|
£106m
|
11
|
Total streaming hours
(hrs)
|
449m
|
387m
|
16
|
Share of commercial
viewing
|
33.7%
|
34.5%
|
(0.8%
pts)
|
Share of top 1,000 commercial
broadcast TV programmes
|
91%
|
93%
|
(2%
pts)
|
● Our
definition of total organic revenue excludes the impact of any
acquisitions made during the current or prior period. It also
excludes the year-on-year movement in foreign exchange. In
the first quarter of 2024, the unfavourable translation impact of
foreign exchange on total revenue was £6 million. There were no
acquisitions in the current or prior period.
● Total
digital revenue includes digital advertising revenue and
subscription revenue as well as linear addressable revenue, digital
sponsorship and partnership revenue, ITV Win and any other revenues
from digital business ventures.
● Total
streaming hours measures the total number of hours viewers spend
watching ITV across all streaming platforms. This figure
includes both ad-funded and subscription streaming. For Q1 2023,
total streaming hours were reported as 389 million hours, which
included some estimates of total streaming viewing from third-party
data providers. This has since been updated to reflect more
recently available and accurate data.
● 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 less than ten minutes. This
metric is calculated as a 12-month rolling average to normalise
seasonal scheduling.
● 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 commercial broadcast TV viewing in the UK, from
transmission and seven days post transmission on catch up. ITV
Family includes ITV1, ITV2, ITV3, ITV4, ITVBe, CITV and CITV
Breakfast in 2023 only, ITV Breakfast and associated "HD" and "+1"
channels.
● % change for
performance indicators is calculated on rounded numbers.
5. ITV continues to have good access to liquidity. At 31 March
2024, net debt[2] was
£272 million (31 December 2023: £553 million). ITV had total
liquidity of £1,514 million, comprising total cash of £614 million
and committed undrawn facilities of £900 million.
6. The net pension surplus of the defined benefit schemes at 31
March 2024 on an accounting basis was £216 million (31 December
2023: £209 million surplus). The marginal increase in the surplus
since the year-end is the result of an increase in corporate bond
yields offset by market-implied inflation.
The triennial valuation of the ITV
Pension Scheme (the Scheme) as at 31 December 2022 has been
completed. At the valuation date, the Scheme had a surplus of £83
million. This is compared to a deficit of £252 million at the
previous valuation date of 31 December 2019.
As the Scheme is in surplus, there
are no deficit contributions payable. The Group will continue
contributing an annual payment of c. £3 million under the London
Television Centre Pension Funding Partnership. The Group's pension
deficit contributions for the year to 31 December 2023 were £40
million, and for the year to 31 December 2022 were £137
million.
The scheme is well hedged against
inflation, interest rate volatility and longevity. Refer to Note
3.7 of the ITV Plc 2023 Annual Report and Accounts for further
details of the Group's pension schemes.
Going forward we will report the net
pension surplus or deficit at the half-year and full-year results
only.
7. As of market close on 8th May 2024, ITV had bought back
45,071,121 shares, all of which have been held in
Treasury.
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 2023 Annual
Report and Accounts including, without limitation, 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 20 7157 6581
Media Relations
Paul
Moore
+44 7860 794444
Laura
Wootton
+44 7917 862293
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