Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
ITV plans to cut costs by an additional £20mn this year after warning that its programme-making arm continued to be hit by the aftermath of last year’s strike by Hollywood writers and actors.
Shares in the UK broadcaster dropped about a tenth on Thursday morning after ITV said revenues fell 8 per cent in the nine months to the end of September to £2.7bn, worse than analysts had expected.
ITV said revenue at its studios division would fall by a fifth in the nine months to September, taking full-year numbers down by “mid-single digits” and marginally lower compared with last year, when excluding the impact of the strikes.
ITV Studios, which makes a number of hit shows, including Love Island and Disney’s Rivals, has delayed about £80mn of revenue, that was due this year, to 2025 as a result of the strikes.
The group also suffered from “lower demand from free-to-air broadcasters in Europe in the short term”, as well as having a larger than usual number of shows scheduled for the fourth quarter.
Total advertising revenue was flat in the third quarter, but ITV warned that it would drop about 6 to 7 per cent in the following three months, after getting a boost last year from the 2023 Rugby World Cup. Advertising bookings had also been hit by the uncertainty in the lead-up to the UK Budget.
ITV’s chief executive Carolyn McCall said: “ITV Studios is performing well despite the expected impact of both the writers’ strike and a softer market from free-to-air broadcasters.”
McCall said the extra £20mn in cost cuts would be split between reductions in content and bringing forward savings that were due to take place next year. ITV has already announced £40mn of cost savings through restructuring, efficiency and simplifying ways of working.
ITV has also been hit by a slowdown in the traditional linear television advertising market as more brands seek to reach their consumers via online services such as social media.
However, it is seeing growth in advertising on its streaming platform, ITVX, with total advertising revenues for 2024 expected to be up about 2.5 per cent from last year.
Roddy Davidson, analyst at Shore Capital, said there was still “positive medium-term upside potential” for ITV but that he would “struggle to see a short-term catalyst” for the group’s valuation.