ITV Interim results for the period ending 30 June 2022
ITV Studios and M&E ahead of expectations, ITVX on track to launch in Q4
Carolyn McCall, ITV Chief Executive, said:
“ITV has recorded a strong performance across the business with both our Studios and Media & Entertainment divisions performing better in the first half than we expected at the beginning of the year. Revenues in both divisions were up year on year and as a result total external revenue rose 8%.
“ITV Studios revenue was up 16%, growing ahead of the wider market, as we continue to diversify the business. High end scripted hours grew 82% and revenue from streaming platforms grew strongly, now accounting for 19% of total revenues, up 3% points.
“In M&E our investment in content, data and technology is already bearing fruit with digital advertising revenue up 20% driven by record levels of streaming on the ITV Hub, up 8% with 814 million streams in H1.
“Despite the tough comparators of last summer, when the Euros and a rebounding economy drove record advertising revenues, TAR is expected to be broadly flat in the nine months to the end of September. We are mindful of the macro economic uncertainty, however we have for the first time ever in Q4, the football World Cup to look forward to.
“We are on track against all the new KPIs and targets we announced earlier this year as part of the second phase of our More Than TV Strategy and we are very focussed on successfully launching ITVX, our new free ad-funded streaming service, in Q4 this year.”
Group Financial highlights – significant revenue growth
Significant revenue growth with total external revenue up 8% at £1,679 million
- Total ITV Studios revenue up 16% at £927 million with growth across the business
- Media & Entertainment (M&E) revenue up 4% at £1,065 million with total advertising revenue (TAR) up 5% and within this digital advertising revenue was up 20%
Adjusted group EBITA was down 3% at £318 million. This reflects strong underlying performanc e offset in M&E by additional disciplined investment of £58 million in content and £20 million in data and technology ahead of the launch of ITVX. Additional content investment, as previously guided, relates to a combination of the return of key shows disrupted last year by COVID and front-footed investment. Adjusted EPS was up 2% at 6.0p
EBITA was £228 million. Statutory profit before tax was £219 million (30 June 2021: £133 million) and statutory EPS was 4.8p (30 June 2021: 2.4p)
The Board has declared an interim dividend of 1.7p and remains committed to paying a total dividend of at least 5p for the full year
ITV Studios – driving growth ahead of market and increasing diversification
- Number of high-end scripted hours produced up 82%
- Formats sold in three or more countries in H1 has increased from 7 to 9
- Percentage of total Studios revenue from streaming platforms in H1 grew from 16% to 19% with commissions or development deals with most of the major platforms
- Continuing to strengthen our creative talent with the acquisition of Plimsoll (subsequent to the half year), a leading natural history producer and the arrival of Ben Stephenson, the renowned drama producer, who has joined ITV to set up a transatlantic scripted label
Media & Entertainment (M&E) – Best ever digital viewing; ITVX, our free, ad-funded streaming service, on track to launch in Q4
- Strengthened streaming offering has helped drive the best ever digital viewing with 814 million streams in H1 on ITV Hub, up 8% year on year
- Planet V now has 1,500 professional users (1,200 at 31 March 2022) and in H1 attracted 192 new digital-only advertisers to ITV
- M&E KPIs demonstrate good strategic progress with total digital revenues up 22% in H1; total streaming hours up 6%; and monthly active users flat at 9.7 million against tough comparatives in H1 2021 driven by 'Oprah With Meghan and Harry' and the Euro Football Championships. Total UK subscribers are up 16% to 1.45 million compared to 31st December 2021 and BritBox International subscribers are up 13% to 2.7 million over that period. At the same time we maintained our strength in linear with 33.7% share of commercial viewing (SOCV) (2021: 33.6%) and 94% of top 1,000 commercial broadcast TV programmes (2021: 93%)
Outlook
2022 financial outlook:
- ITV Studios is on track to exceed 2019 revenues over the full year with an exciting pipeline of scripted and unscripted programmes. We will continue to grow ahead of the market, which we expect to grow at around 3% over the medium term
- As expected, the TAR comparatives are tough in Q3 against the Euro Football championships in 2021 and we are mindful of the macroeconomic and geopolitical uncertainty. However in Q4 ITV will broadcast the FIFA World Cup which will benefit TAR in November and December
- Compared to the same period in 2021, TAR in July 2022 is expected to be down 9%, better than we expected and August down 18%, broadly in line with our expectations. Compared to 2019, July is expected to be up 17% and August up 5%
- It is too early to give a detailed forecast for September but for the nine months to the end of September TAR is expected to be broadly flat compared to the same period in 2021. Compared to 2019, the 9 months are anticipated to be up 8%
- ITV will redeem the 2.125% €335 million Eurobond which matures in September 2022 using available cash, in order to reduce gross cash and gross debt. This will improve the efficiency of the balance sheet and strengthen our credit metrics
Strategic delivery outlook:
- ITV is well positioned to deliver Phase 2 of the More Than TV strategy and create long-term value for shareholders
- ITV's balance sheet is robust enabling it to invest in digital acceleration and deliver returns to shareholders in line with its capital allocation policy.
- We remain committed to our ITV Studios adjusted EBITA margin guidance of 13% to 15% from 2023. We continue to drive efficiencies through advancing our digital innovations and as we have previously guided, given current inflation in the production market, we expect the margin to be at the lower end of the range in the shorter term
- With the launch of ITVX we are confident in delivering at least £750 million of digital revenues by 2026 and delivering attractive returns to shareholders