ITV bets on Britbox as ad sales plummet
ITV has revealed another big drop in advertising revenues just months before it launches a streaming platform.
The British commercial broadcaster blamed a 7pc fall in firstquarter ad sales on Brexit uncertainty and warned the turmoil was set to continue.
Shares dived 6.1pc to their lowest this year despite a strong showing at its studios arm, which makes programmes including Line of Duty, Bodyguard and Victoria ( pictured).
ITV said the absence of the football men’s World Cup this summer and investment in its Britbox streaming service would put further pressure on its balance sheet, with ad sales expected to fall by 6pc in the first half. Chief executive Carolyn McCall said the tough conditions were ‘as expected’ and the broadcaster would rely more on ITV Studios and online audience for growth.
She warned in February that advertisers were holding back spending because of turbulence surrounding the UK’s exit from the EU. But, pointing to robust viewing figures that show it is increasing its audience share, McCall praised the ‘strength and depth’ of the company’s output.
She said: ‘We are making good progress in delivering the strategy and we expect to launch Britbox in the second half of the year.’ ITV, which is behind popular shows Love Island and Coronation Street, said total revenues fell 4pc to £874m in the first three months of 2019.
The figure included a 7pc drop in ad revenues to £417m.
However ITV Studios provided some relief, posting a 1pc rise in revenues to £385m off the back of major successes such as Bodyguard and Line of Duty.
Both were sold to the BBC and became the two most-watched dramas of 2018 and 2019.
McCall said programmes expected to draw large audiences later this year included the rugby World Cup and returning favourite Love Island.
She also said Britbox, the streaming service it is launching with the BBC, was on track for the second half of 2019.
It will compete with Netflix and Amazon Prime, featuring shows from the back catalogues of both its backers. But analysts were not convinced a strong showing from its studios arm would cushion advertising woes.
Russ Mould, investment director at AJ Bell, said: ‘ITV remains reliant on TV advertising for a big chunk of its revenue. So it is little wonder the company is reaching for initiatives like its Britbox streaming venture.
‘Investors can take some succour from underlying trends which show people still like to watch ITV.’
And in a gloomy note to investors, Liberum analyst Ian Whittaker downgraded ITV from a ‘buy’ to ‘hold’.
He wrote: ‘With an uncertain political environment and a continuing pattern of downgrades, it is hard to push a buy case now.’
ITV said viewers spent 4.4bn hours watching its channels live in the three months to March 31, a drop of 3pc, although audience share rose from 23pc to 24pc.
However, the time viewers spent watching its programmes online rose 16pc to 96.8m hours and the number of users registered with the ITV Hub rose 29pc to 28.4m.