Victoria can’t save ITV from first slump in adverts for 7 years
BROADCASTING giant ITV has suffered its first fall in advertising revenues since the financial crisis despite the popularity of new shows such as Victoria.
The group, which is also home to longrunning soaps Coronation Street and Emmerdale, said ad sales were down 3pc last year to £1.7bn.
It was the first slide since 2009 – when marketing budgets were cut during the financial crisis – and was blamed on ‘political and economic uncertainty’.
ITV expects a further fall in advertising revenues of 6pc in the first four months of this year despite a ‘strong slate’ of programmes that includes The Voice, The Halcyon, Broadchurch and its coverage of the 2017 Six Nations rugby championships.
But total revenues for 2016 were up 3pc to just over £3bn as its production arm ITV Studios, which distributes shows all over the world, saw a 13pc increase to £1.4bn.
Online and interactive revenues rose 23pc to £231m last year.
With the push into content helping to offset television advertising woes, group profits edged £4m higher to £847m.
ITV will pay a full-year dividend of 7.2p a share, up from 6p the previous year. But the special dividend was cut in half to 5p.
Shares in ITV – which failed in its bid to buy Peppa Pig owner Entertainment One last year, sparking speculation it could become a takeover target – rose 4.5pc, or 9.2p, to 211.7p.
Chief executive Adam Crozier said the group performed better than a depressed, wider television advertising market, but insisted TV was in ‘rude health’.
Crozier said: ‘TV generally is in good shape. The fall in advertising revenues over the course of last year was more to do with shortterm uncertainty.’
He added that alongside Brexit caution, revenues have also been hit as the supermarkets invest heavily in price cuts rather than glossy adverts.
George Salmon, equity analyst at Hargreaves Lansdown, said while the slowdown in TV ad spend was likely to be a shortterm trend, there are challenges ahead for ITV.
He said: ‘Longer-term viewing habits are clearly moving towards a more on- demand set up. ‘This brings the group into competition with Amazon and Netflix, two pretty bruising rivals with deep pockets.’
He added: ‘While continuing to provide entertaining content is obviously essential, building a slick online platform could be just as important.’
ITV also revealed that the size of its pension deficit has almost doubled and stood at £328m at the end of 2016, significantly up from £176m a year earlier. ITV has faced speculation that it could be taken over by a foreign predator such as Liberty Global, which already has a 9.9pc stake, or US rivals NBC or Viacom. It is also thought that BT could be interested in the broadcaster.
Neil Wilson, an analyst at trading firm ETX Capital, said: ‘ITV remains a prime target and until a bid is made we will continue to be talking about it.
‘This should continue to act as a floor under the share price even while ad sales drop.’