ITV’s share price jumps 9% as broadcaster predicts Ad sales recovery

ITV shares rose on Thursday after the broadcasting goliath announced signs of recovery in the battered advertising market.

At 66.4p per share, ITV’s share price was trading 9% higher approaching end-of-week business.

Revenues at the Love Island and Big Brother maker dropped 2% in 2023 to £3.6 billion, which in turn pulled pre-tax profit down to £193 million from £501 million a year earlier.

ITV struggled as the tough economic landscape pulled total advertising revenues (TAR) 8% lower year on year. However, a 21% rise in digital advertising revenues helped offset a 15% decline in linear advertising.

Looking ahead, the FTSE 250 company said that it expected TAR to improve 3% year on year during the first quarter of 2024 thanks to “continued strong growth in digital advertising revenues.”

ITV’s net debt dropped to £553 million by December from £623 million 12 months earlier. It kept the full-year dividend locked at 5p per share.

ITV also announced that a £235 million share buyback programme is to begin today. This follows the £255 million sale of its 50% stake in streaming platform BritBox International to BBC that was announced on 1 March.

Streaming And Studios Impress
In another strong year for its digital operations, ITV said that the number of active monthly users at its ITVX streaming platform rose 19% year on year. Total streaming hours were up 26% over the period.

Meanwhile, sales at its ITV Studios arm rose 4% in 2023 thanks to successful programmes like Mr Bates vs The Post Office and the Netflix -0.6%-streamed Fool Me Once. Both turnover and profit hit record peaks last year.

The firm said that its studio’s division “is on track to deliver total organic revenue growth of 5% on average per annum from 2021 to 2026… and at a margin of 13% to 15%.” Revenue growth is is expected to beat the market average over the period.

New Efficiency Programme
ITV also said that its cost savings programme stretching between 2019 and 2026 had already delivered £130 million worth of savings. It added that “we are on track to deliver the full £150 million by 2025,” one year ahead of schedule.

The broadcaster announced too that it was “now in the early stages of a new strategic restructuring and efficiency programme… to reshape the cost base, enhance profitability, and support the growth drivers of Studios and Streaming.”

It said the initiative would deliver incremental annualised gross savings of “at least” £50 million each year, and provide a £30 million gross benefit in 2024.

ITV said that the programme would deliver cost benefits “over a number of years.”

“A Mixed Bag”
Describing ITV results as “a mixed bag,” analyst Derren Nathan of Hargreaves Lansdown said that “a strong performance from digital revenues has helped to keep overall revenue declines in the low single-digit range.”

He noted, too, that “the growth in digital is being driven in an efficient manner too with the earlier £150 million cost saving target now set to be achieved in 2025, a year earlier than originally planned.”

Nathan added that “the expectation that total advertising revenue will rebound 3% in the first quarter of 2024 suggests things are going in the right direction,” but he added that “there’s still material execution risk here.” Forbes