ITV Profits Fall By 12% After Boost In ITVX & Content Spend

ITV’s profits slid by more than 12% last year reflecting “planned investment in content and ITVX,” according to the network.

Unveiling its full-year 2022 results in the past few minutes, the Love Island and Nolly commercial broadcaster showed a revenue boost of 7% to £4.3B ($5.2B) but adjusted EBITDA for the group slid by 12% to £723M ($865M). The slide was a reversal of the previous year, when a post-COVID uplift saw profits shoot upwards by an impressive 42%. In 2022, group adjusted EBITDA margin fell from 24% to 19% and pre-tax profit rose from £480M to £501M.

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Total advertising revenue virtually flatlined to stay around the £1.9B mark, reflecting difficulties in the market, although digital advertising revenue rose by 17% to £343M in line with ITV’s expectations.

CEO Carolyn McCall said “significant progress” is being made “at pace” despite the “current macro and geopolitical uncertainty,” although she flagged a challenging short term outlook that will see advertising revenue fall by 11% in the first quarter of 2023.

Within the Media & Entertainment division – ITV’s content division – profits fell by an even sharper 22% to £464M adjusted and the group put this down to “reflecting the planned investment in content and ITVX to drive future growth.”

Total content costs are expected to hit around £1.3B this year as new streamer ITVX launches and takes on big budget original shows including the likes of the Jason Isaacs-starring Carrie Grant biopic Archie, while subsuming UK streamer BritBox, which was previously co-owned with the BBC.

ITV said it is “very pleased” with ITVX’s performance following 1.5M new registered users, a 69% increase on streaming hours compared with last year’s ITV Hub and a 109% boost from young people. More evolution is to come and there will be “further investment to enhance the user experience and features including deeper personalisation across the viewer experience.”

ITV Studios gains

Producer-distributor ITV Studios continued to do much of the heavy lifting results-wise, however.

The Julian Bellamy-led outfit saw revenues rise by 19% to £2.1B and had adjusted EBITDA by 22% to £259M.

Revenue in the ITV Studios U.S. division shot upwards by 26% to £467M, with ITV flagging the likes of Showtime’s Let the Right One In and Apple TV’s second season of Physical.

Having set a five-year plan for ITV Studios last year, the division saw a 58% increase in its high-end scripted hours and sold 19 formats in three or more countries, both of which beat their stringent Key Performance Indicator targets.

With percentage of total ITV Studios revenue from streaming platforms growing from 13% to 22% via commissions or development deals with most of the major streamers, ITV Studios said it would be increasing its target of streamer revenue from 25% to 30% by 2026 – a bold move in the current climate.

McCall said ITV is “reducing its dependence on the linear business” through a combination of a “scaled and expanding global TV production business, a resilient linear TV advertising business, a rapidly growing digital targeted TV advertising business and a unique vertically integrated producer broadcaster and streamer model.”

“As a result of ITV’s deliberate strategic actions and strong execution, ITV has a scaled and expanding global production business, a rapidly growing targeted digital advertising business, a resilient linear TV advertising business and a unique vertically integrated producer broadcaster and streamer model,” said McCall.

“This means that ITV is now a demonstrably more balanced business which is ideally placed to take advantage of the growing demand for quality content from viewers, broadcasters and streamers and take a larger share of the digital advertising market.”

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