ITV is to embark on a “restructure and efficiency programme” as ad revenue drops.
The group’s profits fell 32% in the last 12 months, despite its non advertising revenue increasing by 3%. The increase was mainly due to record revenues and profits from its ITV Studios arm.
They included stand-out hit, Mr Bates vs The Post Office; Fool Me Once, which was one of Netflix’s all time top 10 English language dramas; Squid Game: The Challenge; Love Island and My Mum, Your Dad.
“In 2023 we saw the benefit of the actions we have taken to reposition ITV towards higher sustainable growth. Our Studios business recorded the highest ever revenues and profits and in its first year ITVX delivered strong growth in viewing and digital revenue with investment on plan. This growth in production and streaming substantially offset the challenging linear TV advertising market conditions,” said Carolyn McCall, ITV Chief Executive.
“We remain confident in delivering our KPI targets, and are making good progress towards these – most notably ITV Studios organic revenue growth of 5% on average per annum between 2021 and 2026 at a margin of 13 to 15% and to deliver at least £750 million of digital revenues by 2026.”
Talking about the restructure, McCall added:
“Our existing cost saving programme targeting £150 million between 2019 and 2026, has delivered £130 million of annualised savings to date. We are on track to deliver the full £150 million by 2025 – one year early. In addition, we are now in the early stages of a new strategic restructuring and efficiency programme across the Group to reshape the cost base, enhance profitability, and support the growth drivers of Studios and Streaming. By the end of 2024 we expect the programme to have delivered incremental annualised gross savings of at least £50 million per year, giving a £30 million in year gross benefit in 2024. The ongoing programme is designed to deliver further material incremental savings over a number of years.”
The company stated that the new “strategic restructuring and efficiency programme” would be based around “transforming ITV from a linear broadcaster to a multi-platform broadcaster and streamer.”
The report added:
“Savings will come mainly from technology and operational efficiencies, organisational redesign across Group functions, M&E and Studios and permanent reductions in discretionary spend across the Group.”
Despite the fall in advertising, ITV said it had achieved a “robust financial performance.”
Total revenue was down 2% and total external revenue was down 3% at £3,624 million, with record revenue in ITV Studios, up 4%, and a 19% growth in digital revenues, which it said “substantially offset” a 15% decline in linear advertising.
Adjusted EBITA was down 32% to £489m – which was down to a drop in ad revenue and investment in its streaming service, ITVX.
ITVX saw monthly active users increase 19% and total streaming hours up 26%.
