...By Jack Sylva for TDPel Media.
ITV, the well-known broadcaster famous for Coronation Street, has reported a 10% drop in advertising revenue during the first quarter of the year.
However, the company remains optimistic, expecting the Rugby World Cup and Love Island to boost returns later in the year.
Nevertheless, there are concerns that ad revenue could decline by another 12% in the following quarter, reflecting a broader economic downturn affecting all ad-dependent entities.
Overall, ITV’s revenue for the first three months of the year decreased by 7% to £776 million, aligning with market expectations.
ITVX, the free streaming service provided by ITV, is experiencing significant growth, with a 49% increase in streaming hours and a 29% rise in digital revenue.
Some experts speculate that ITVX will benefit from cost-conscious consumers trading down and potentially canceling more expensive rival services like Netflix.
This perspective gains support from Disney’s recent announcement that its flagship streaming service lost 4 million subscribers this year.
There are doubts about the profitability of the streaming model for media giants such as Disney and Netflix.
Although Disney’s streaming business reported a loss of $659 million, it represents an improvement from the £1.1 billion lost in the previous quarter.
Carolyn McCall, ITV’s Chief Executive, commented on the first-quarter results, stating that advertising revenue was down 10%, in line with expectations and better than the broader TV advertising market.
McCall anticipates a positive outlook for the third quarter, with the popular shows Love Island and the Rugby World Cup expected to attract large broadcast and streaming audiences.
The strong performance of ITVX and its growing digital revenues demonstrate that the content offered by the streaming service resonates well with viewers.
This places ITV in a favorable position to capitalize on the rebounding advertising market in the medium term.
InvestingReviews.co.uk’s John Choong highlighted the positive aspects of ITV’s Q1 results, particularly the potential of ITVX.
The free streaming service, supported by a significant increase in streaming hours, experienced strong double-digit growth in digital revenues.
This indicates that the content provided by ITVX is connecting effectively with viewers, offering ITV an advantage to benefit from an advertising market recovery in the future.
Joshua Warner, a Markets Analyst at City Index, noted that ITV’s figures for the first quarter fell below expectations.
The decline in revenue from ITV Studios, due to the delayed release of content until later in the year, was a primary factor.
However, the company remains committed to expanding ITV Studios at a faster pace than the overall market and improving its profitability in the coming years.
Although advertising revenue declined by 10%, which was less than anticipated, ITV cautioned that the current quarter could see a further 12% decrease, indicating ongoing challenges in the advertising landscape.
Looking ahead, ITV aims to generate £750 million of digital revenue by 2026, reflecting its commitment to further develop its presence in the digital streaming space.
