ITV’s Crozier cheers City with plans to cut £25 million in costs
ITV’s got talent, investors decided today as it beat first-half profit hopes and said it would counter any Brexit downturn in advertising by cutting costs.
Its shares, which had hit a low of 154p immediately after the Leave vote, rose 12.4p, or 7%, to 197.2p.
Chief executive Adam Crozier also boosted speculation that he is poised to take over rival programme makers as he continues to shift ITV away from a company dependent on advertising revenues in one country, to a multinational content producer.
“There is a lot of investment to come and we have the balance sheet to do that,” said Crozier, who is said to have been eyeing Peppa Pig maker Entertainment One recently.
“We will continue to invest in the content business. Sometimes through acquisitions, sometimes through talent and sometimes through joint ventures.”
Revenues rose 11% to £1.5 billion in the first half, driven by a 31% leap to £651 million at ITV Studios, the programme-making arm responsible for The Durrells, Britain’s Got Talent and even the BBC’s Poldark.
First-half advertising revenues were flat at £838 million and Crozier said they would fall in the third quarter as audiences flocked to the BBC’s exclusive coverage of the Olympics.
He said while ad revenues were likely to be up 6% this month, they would drop 7% in August and between 5% and 10% in September. He added: “It is too early to predict what effect Brexit will have beyond September.”
But just in case, ITV said it will cut costs by £25 million in 2017.
Crozier said cuts would be “right across the company” but would not say how many jobs might be at risk.
He pledged: “The cost savings will not come out of programme making. The demand for high-quality drama remains higher than ever with such things as Poldark and our new season dramas Harlots, Lewis and the eagerly anticipated return of Cold Feet.”
George Salmon, analyst at Hargreaves Lansdown, said: “We feel that ITV now looks more stable than last time around, if it turns out we are heading into an economic slowdown.”