ITV profit, revenue hit by pandemic

UK commercial broadcaster ITV has reported a large drop in profit and revenue for 2020 as it feels the impact of the Covid-19 pandemic.

Carolyn McCall

ITV’s pre-tax profit fell to £325m (US$450m) in 2020 from £530m in 2019, hit by a 16% decrease in total revenue to £3.26bn from £3.89bn.

The broadcaster said its results were “materially impacted” by Covid-19, with the shutdown of most of its productions last March pushing revenue at its production business, ITV Studios (ITVS), down by a quarter to £1.37bn in 2020 from £1.82bn in 2019.

Broadcast revenue also declined by 8% to £1.89bn from £2.06bn, while total advertising revenue fell by 11% to £1.58bn from £1.77bn, despite a 17% increase in VoD advertising revenue.

Earnings before interest, tax and amortisation (adjusted EBITA), which are adjusted to remove non-recurring items and movements in foreign exchange rates, dropped by 21% to £573m from £729m. According to ITV, however, this was better than expected thanks to a strong end to the fourth quarter and tight cost control.

Adjusted EBITA at ITVS plummeted by 43% to £152m, hit by the decline in revenue and costs associated with Covid-19 safety measures. Broadcast adjusted EBITA was 9% lower year-on-year at £421m, with the decline in advertising partly offset by the reduction in the programme budget.

Elsewhere, total ITV viewing rose by 1% year-on-year in 2020. Online viewing decreased by 5%, which the broadcaster blamed on a lack of VoD “volume drivers,” such as Love Island, fewer soaps and no major sporting events, which were all paused because of the pandemic.

ITV Family’s share of viewing was down 4%, partly due to the volume of rival the BBC’s news output during the year, fewer episodes of the soaps and less new content because of the production hiatus. The main ITV channel, however, recorded a 16.7% viewing share – it’s third biggest in a decade.

ITV expects total advertising revenue in the first quarter of 2021 to decline by 6% year-on-year due to the UK being in lockdown during this period, with growth of 14% anticipated in VoD advertising revenue.

As the UK prepares to come out of lockdown, ITV said it expects to see an 8% increase in total advertising revenue in March, with April expected to be up by between 60% and 75% when shops and other non-essential businesses re-open. This would lead to a rise in total advertising revenue of 5-7% in the first four months of the year.

ITV said its key strategic focus in 2021 is to internationalise its formats, grow its scripted business and increase its commissions for OTT platforms. Ninety percent of the company’s programmes are back in production, but the broadcaster did warn of further disruption, delay and increased costs due to Covid-19-related safety protocols.

CEO Carolyn McCall said: “We are encouraged by the roadmap out of lockdown. We are seeing more positive trends in the advertising market in March and April and the majority of our programmes are now back in production. However, there remains uncertainty in all markets around the world with the potential risk of lockdowns, which, if they materialise, will affect revenues.

“We are committed to taking further cost out of the business while further investing to accelerate the delivery of our strategy and digital transformation. We have restructured the broadcast business to create the Media & Entertainment division to better respond to changing viewing habits. ITV Studios is well positioned to take advantage of the continued strong growth in the demand for quality content internationally.”