ITV boss Adam Crozier today announced the UK-based broadcaster-producer would be looking to cut up to $32.8 million in costs to counteract the anticipated economic fallout from Brexit and the UK’s decision to leave the European Union.
“Against a backdrop of wider economic uncertainty following the E.U. referendum, we have put in place a robust plan to allow us to meet the opportunities and challenges ahead. As part of this we are targeting a £25 million reduction in overheads for 2017,” said Crozier in a statement released with ITV’s interim results for the six months to June 30.
Those results actually showed ITV, which has had a challenging time behind the scenes with recent exec shuffles and occasionally disappointing ratings, reporting a 9% increase in adjusted profit before taxes to $558.2 million (£425 million) for the first six months of 2016, while adjusted earnings per share were up 10%. Adjusted earnings before interest, taxes and amortization (EBITA) before exceptional items and pre-tax profit improved 10 percent, with ITV Studios posting a 42% improvement to $158.9 million (£121 million). Those better-than-anticipated results were driven by ITV Studios production arm.
The ITV cost cutting will be made across the board in terms of overhead expenditure, said Crozier but would not affect expenditure on programming or production. Crozier did add that the drop in value of Sterling post-Brexit would lead to an increase in the company’s revenue and profit, thanks to it to its growing U.S. production and sales activities.
In a fairly seismic move for the British broadcasting scene back in April, the BBC’s drama chief Polly Hill as joined ITV as their new head of drama. The surprising news came as ITV bolstered its exec lineup after a number of recent departures. Also joining ITV were Optomen managing director Sue Murphy as the commissioner for factual entertainment. ITV Studios’ Siobhan Greene became the commissioning team’s head of entertainment and Peter Davey was promoted to head of comedy. Angela Jain took over as managing director of ITV Studios Entertainment.
Those exec moves came as longtime drama boss Steve November announced he would be leaving the company after 16 years. November’s exit came at a challenging time for ITV, following the end of ratings juggernaut Downton Abbey. While the production-distribution side of the business ITV Studios has continued to expand and grow ambitiously with a number of acquisitions and first-look deals, the channel has suffered from a ratings decline. Big-budget gambles such as Jekyll And Hyde and Beowulf have not worked as hoped with audiences. That said, share of viewing for the main channel was 7% up for the first six months with the family share of viewing up 3%.
ITV Studios has also continued with its ambitious acquisition-led growth. In terms of corporate acquisitions, ITV last year bought Boom Supervisory Limited, the holding company of Brit TV production banner Twofour Group, from majority shareholder LDC, the private equity arm of Lloyds Banking Group. ITV payed an initial cash consideration of $86 million for 75% of the group, with a put and call option for the remaining 25% that can be exercised at the end of 2017 and between the end of 2019 and 2021, with any further payment subject to minimum average EBITA thresholds. Additionally, Twofour owns 51% of drama indie Mainstreet Pictures and has a put and call option to acquire the remaining 49% of its subsidiary Mainstreet that can be exercised between 2018 and 2023. The total maximum consideration for Twofour and the remaining 49% of Mainstreet is $440 million with contingent payments dependent on both businesses delivering exceptional profit growth to $94 million in aggregate over the payment period.
In recent months, ITV has also taken full control of Mammoth Screen and closed a deal to acquire 100% of John De Mol’s Talpa in a deal worth an initial $530 million. In the past two years, the company has bought a string of U.S. and UK production companies, including Big Talk, The Garden and Leftfield Entertainment.