US shows boost ITV Studios

Love Island US winners Zac and Elizabeth

UK media giant ITV is expecting growth in revenue at its ITV Studios production arm in 2019 thanks to success in the US with shows including reality formats Love Island and Hell’s Kitchen.

In a third-quarter trading statement released on Tuesday, ITV’s CEO Carolyn McCall said she expects revenue at ITV Studios to increase by 5% year-on-year in 2019 on the whole, aided in particular by good growth at ITV America. Revenue at the division in the third quarter was up 1% year-on-year to £1.1bn (US$1.4bn).

“ITV Studios’ performance in 2019 will benefit from a very strong second-half delivery schedule and our Q3 performance reflects this, with good growth across the business particularly from ITV America with Love Island US and the part delivery of Hell’s Kitchen and Snowpiercer,” McCall said.

Carolyn McCall

“We expect this performance to continue in Q4, and over the full year we are confident that we will deliver at least 5% growth in ITV Studios’ total revenues at a margin of 14% to 16%.”

The CEO did note, however, that the production arm’s performance will be weaker in 2020 as a result of “the phasing of deliveries” of shows in the second half of 2019, although the company continues to expect the division’s revenue to grow by at least 5% CAGR over the medium term, with a 14% to 16% margin.

“We continue to build our creative pipeline and have a strong slate of new and returning programmes in the UK and internationally for both broadcasters and OTT platforms, including The Serpent, Zero Zero Zero, Suburra, Crank Yankers, Queer Eye, Saturday Night Takeaway and Love Island globally,” McCall said.

The online segment, meanwhile, performed well in the third quarter of 2019, the exec added, thanks to “four of the five highest rating new dramas so far this year” and the Rugby World Cup. This helped the company to reach its 2021 target of 30 million registered users on ITV Hub ahead of plan, while online revenue rose by 23% year-on-year in the first nine months of 2019.

Total advertising revenue, however, decreased in the nine months by 3%, pushing overall broadcast and online revenue down by the same amount. Total external revenue for the company on the whole slipped by 2% in the nine months year-on-year, to £2.2m ($2.8m) from £2.3m ($3m), while total viewing hours declined by 6% to 12 billion hours from 12.7 billion hours.

“ITV’s overall performance for the first nine months of 2019 was as we expected, and although the economic environment continues to be uncertain, we are making good progress in executing our strategy,” she said.

The exec added that the company has so far seen positive feedback from the launch of the BritBox streaming service in the UK last week.