ITV Predicts 7% Q4 Ad Drop Due To “Political And Economic Uncertainty”

British commercial broadcaster ITV, the home of shows like The Voice and and The X Factor, said it’s expecting a 7% year-on-year drop in fourth-quarter ad revenues due to increasingly cautious advertisers and the current uncertain political climate.

On Thursday, the company reported a third-quarter fall, which it had predicted, of 4% after a flat performance in the first half of the year, largely a reflection of the advertising market as a whole in the country since the Brexit result on June 24. ITV said it’s expecting earnings for the year to be broadly flat while full-year advertising revenue was expected to be down 3%.

“In recent weeks the political and economic uncertainty has increased and we are currently seeing more cautious behavior by advertisers,” said ITV chief exec Adam Crozier in a statement. “As a result ITV ad revenue is forecast to be down around 7% in Q4 which means the full year will be down 3% although ITV will again outperform the TV advertising market for 2016. Our strong on-screen performance and continued ability to deliver to mass audiences gives us the confidence that based upon the deals we have done we will also outperform our estimate of the TV ad market in 2017.”

Total external revenue for Q3 was up 5% for the nine-month period while broadcasting and online revenue was up 1%.

Meanwhile, the production arm ITV Studios was up 18%, driven largely by acquisitions. Across the Studios’ business it secured 162 new commissions and 139 recommissions which, said Crozier, “will drive a return to good organic revenue growth in 2017.” Its pipeline includes returning dramas such as Victoria, Poldark, Cold Feet, Endeavour, Vera, Thunderbirds, Prime Suspect, 1973, Harlots and The Good Witch, all of which has sold well internationally. The company has sold around 60 formats globally this year including This Time Next Year, Five Gold Rings, Hell’s Kitchen and Love Island.

“With increased investment in scripted content and the lumpiness caused by the timing of deliveries of some of our key shows, ITV Studios profits in 2017 are likely to be broadly in line year-on-year,” he added.

For the full year of 2016, the company said it expected to be broadly in line with 2015 and was on track to deliver £25M ($31M) of overhead cost savings for 2017 due to the absence of a major sporting event next year.

ITV Studios has been ambitiously growing thanks to a number of corporate acquisitions. Last year it bought Boom Supervisory Limited, the holding company of Brit TV production outfit Twofour Group, from majority shareholder LDC, the primate equity arm of Lloyds Banking Group. It also took full control of Mammoth Screen this year and closed a deal to acquire 1–% of John De Mol’s Talpa. In the last few years, the company has bought a raft of U.S. and UK production companies including Big Talk, The Garden and Leftfield Entertainment.

Last month, ITV said it would cut around 120 jobs as part of it’s $31M overhead cost savings plan, largely spurred by the economic uncertainty following the UK’s decision to leave the EU.

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