ITV has recorded a sharp drop in annual profits as the brutal advertising downturn experienced last year outweighed record revenues in its studios business, which made the recent hit drama Mr Bates v the Post Office.
The UK’s largest free-to-air commercial broadcaster said pre-tax profits had fallen by 61% to £193m in 2023, against £501m in 2022, after it was hit by a drop in advertising revenue as well as the planned investment costs in its ITVX streaming service.
The broadcaster said it would cut costs by £50m, on top of an existing drive to save £150m between 2019 and 2026. The new cuts will come mainly from technology and operational efficiencies
Carolyn McCall, chief executive of ITV, said it was “way too early” to discuss whether jobs would be affected. The company has already frozen hiring and clamped down on expenses.
The broadcaster has struggled with a difficult advertising market which McCall has described as the “worst advertising recession since the global financial crisis” of 2008. The slump in advertising was reflected in the biggest round of job cuts at Channel 4 in more than 15 years.
The broadcaster is focusing on higher growth through its studios business, which makes shows such as Love Island as well as dramas such as Mr Bates v the Post Office, which was seen by 4 million viewers an episode when it was aired in January, and a further 10 million through the channel’s on-demand service, ITVX.
McCall said on Thursday that the Mr Bates drama had now been sold to 12 markets worldwide and she was “very proud” of its impact.
“It shows the power of television,” she said. “Television is really brilliant at emotional engagement and moving people ... and moving them to action. Mr Bates is one of the most brilliant examples of that. It has had such an impact on society and the public has risen up and the government is listening.”
Group revenues fell by 2% to £4.3bn, with TV advertising down by 15%. Digital revenues rose by 19% and its studios arm recorded a 4% increase, to £2.2bn.
McCall said total advertising revenue was expected to be up 3% in the first quarter of 2024 helped by digital advertising revenues. ITV expects advertising in to be bolstered by upcoming events including the Uefa Euro 2024 football championships in June.
“The advertising market last year was challenging to say the least but we expect this year to be better than last year,” she said.
ITV said that 2024 would also be affected by the 2023 US writers and actors strike which will delay about £80m of revenue until 2025 and it had also experienced weaker demand from free-to-air broadcasters in Europe who were holding back spending until there was more certainty in the advertising market.
Last week, ITV sold its 50% stake in BritBox International, the British specialist streaming service, to BBC Studios, its joint venture partner for net proceeds of £235m in cash which it plans to return to shareholders.
ITV shares rose by 8% on Thursday.
