ITV has warned it is in the midst of the worst advertising downturn since the 2008 financial crisis.
The broadcaster, which is behind hit shows including Love Island and I’m a Celebrity … Get Me Out of Here!, said earnings more than halved in the first six months of the year as it came up against a “very tough” advertising market and as it invested in its ITVX online streaming service.
“This is the worst advertising recession since the global financial crisis,” said the ITV chief executive, Dame Carolyn McCall.
Earnings fell 52% to £152m and total advertising revenues fell 11% to £811m in the first half of the year compared with the same period a year earlier.
However, McCall said while advertisers were cautious against the current backdrop of high inflation and high interest rates, ITV had not had any difficulty in attracting sponsors for its programmes.
She said: “We’re already talking to advertisers about the Christmas campaign and I think that shows there is no change in the way they view what they’re going to do over Christmas, all conversations about advertising are positive and quite constructive, they haven’t got their head in their hands.
“They’re being cautious because the outlook has been cautious … We’ve had no problems sponsoring any of our shows … every single one of the shows in the autumn has got a sponsor.”
The director of ITV Studios, Julian Bellamy, said the actor and writer strikes in the US could begin to affect the production of ITV shows.
The broadcaster’s US scripted shows include Franklin, starring the British actor Eddie Marsan, Good Witch with James Denton and Snowpiercer with Jennifer Connelly.
He said: “Just to be clear, we are talking about our US scripted business, not the rest of the UK studio distribution. Saying that, if the strike goes into the autumn, it will potentially start impacting when we start production.
“In that context, it is one of the great strengths of the studio, we’re very diversified in terms of genre and geography, so we are in a good position to manage it.”
Strike action in the US by members of Sag-Aftra – the Screen Actors Guild and American Federation of Television and Radio Artists – has caused an industry-wide shutdown.
Despite weaker earnings in the first half, ITV said it was looking for an improved performance in the final six months of 2023 because of a number of large sporting events such as the Women’s World Cup, which is under way, and the Rugby World Cup, which kicks off in the autumn.
ITV Studios, the production arm, performed more strongly, with an 8% rise in revenue while online advertising increased 24%.
McCall said: “The continued momentum behind ITV’s strategic transformation delivered strong growth in Studios and digital revenues in the first half of the year, largely offsetting the expected weakness in the UK advertising market – with total revenue declining just 1% in the first half, even in a very tough advertising market.”
The company said it was too early to give a forecast for September, but “early signs are positive and we expect to see growth in total advertising revenues in the third quarter, with continued strong growth in digital advertising revenues”.
Sophie Lund-Yates, the lead equity analyst at Hargreaves Lansdown, said: “With economic uncertainty mounting and marketers clutching purses tightly to their chest, this was always going to be a difficult time. Away from the short-term bumps, there’s a structural decline happening in the TV space – broadcast ads simply don’t pack the same punch they used to, thanks to the rise of streaming and the fact many of us spend our evenings glued to our phones too.
“To that end, it’s encouraging to see the Studios business picking up the pace – making content for the new binge-watching culture is a good place to be. ITV are up against stiff competition here too though and we’re still some way off from ITV being solely reliant on this more lucrative revenue stream.”
ITV recently abandoned potential plans to buy All3Media – the group behind The Traitors and Fleabag – less than a month after expressing interest in a deal.
ITV shares were up more than 4% on Thursday.
