ITV Revenue Rises 3% As Production Arm ITV Studios Beats Expectations

Love Island
ITV's "Love Island" ITV Studios

British broadcaster ITV’s total revenue increased 3% in 2019 to £3.8B ($4.9B) after the company’s production arm ITV Studios performed ahead of expectations.

The studio, which makes hits including Love Island and Hell’s Kitchen, increased its revenue by 9% year-on-year to £1.9B in the 12 months to December 2019. This was ahead of forecasted growth of 5% and it outstripped advertising revenue for the first time in ITV’s history.

ITV advertising revenue — once its most important source of income — was down 1.5% to nearly £1.8B, according to the annual earnings, which showed a 10% drop in adjusted EBITA to £729M. Earnings per share stood at 13.9p, which was also down 10% on 15.4p in 2018.

ITV CEO Carolyn McCall said earnings were hit by investments in technology, data and streaming, including BritBox, which launched in the UK last year and has hit 1M subscribers in the U.S. She said earnings would have been “broadly flat” had it not been for these investments.

McCall said: “Thanks to the hard work of our teams across the business, our full-year results have come in ahead of expectations helped by revenue growth in the second half of the year in ITV Studios, advertising and online.”

ITV Studios enjoys a strong year

Specifically on ITV Studios, the company said that external revenue — money it makes from third-party commissions — was up 12% to £1.2B. The division’s EBITA stood at £267M, which was up 5% on £255M in 2018.

ITV Studios’ scripted revenue hit £520M last year, which was a 37% rise on 2018’s figure of £380M, and was bolstered by shows including Mammoth Screen’s upcoming BBC series Noughts + Crosses and World Productions show Line Of Duty. Non-scripted revenue was also up 2% to just over £1B.

For the first time, ITV broke down the production arm’s performance in the U.S., where it has won business including two seasons of Love Island for CBS. U.S revenue increased 11% to £271M. ITV also name-checked shows including Queer Eye for Netflix and TNT’s Snowpiercer.

“The demand for quality content from broadcasters and platform owners has never been stronger and this provides a significant opportunity for ITV Studios. We estimate that the global content market is growing at around 3%-5% per annum, with some genres, such as drama, growing more rapidly,” ITV said.

Furthermore, the company added that original hours supplied to streaming services increased by 95% in 2019, with ITV Studios landing commissions including Hot Drop for Quibi and Love Island for Amazon in France.

Coronavirus hits advertising 

Looking ahead to 2020, ITV forecast that ad revenue will be up 2% in the first quarter of the year, but will drop sharply (by as much as 10%) in the month of April. ITV pinned the blame on coronavirus.

“In March and April, we have seen an impact from travel advertising deferments relating to the coronavirus,” it said, adding: “At this stage, it is too difficult to assess the further implications of the coronavirus but we continue to monitor the situation closely.”

ITV added that there is “ongoing economic uncertainty” as a result of Brexit, but it expects ITV Studios to grow in 2020, despite many shows being delivered in 2019.

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