ITV Profits Tumble By 32% But Green Shoots In Production Division As Broadcaster Kicks Off “Strategic Restructuring & Efficiency Programme”

ITV profits tumbled by 32% following a tricky 2023 but there were green shoots in a solid performance from the Studios production arm and in digital advertising.

Delivering its full-year results this morning, the UK’s biggest commercial broadcaster said adjusted EBITDA for the group had fallen 32% to £489M, with margin at 13% – down 6 percentage points. The commissioning team, known as Media & Entertainment, saw EBITDA slide by a whopping 56% to £205M.

Adjusted profit before tax fell by a sharper 41% to £396M. ITV said the profit woes were due to “the decline in linear television advertising” and planned investment in streamer ITVX of £464M. Growth in digital advertising “substantially offset” a 15% decline in linear advertising, according to ITV.

Turnover, however, rose slightly by 2% to £4.2B and there was also a slight increase in total non-advertising revenue.

The results come amidst tricky economic headwinds, with the recession seriously beginning to bite and the U.S. labor strikes having had some impact.

Production arm ITV Studios posted record turnover of £2.2B and was the only business segment to see EBITDA increase, rising by 10% to £286M.

ITV flagged the likes of Mr Bates vs the Post Office – its most-watched drama since Downton Abbey – Netflix’s Fool Me Once and hit game show Squid Game: The Challenge as recent success stories.

By 2026, ITV wants to be a “leader in UK advertiser-funded streaming” via ITVX, expand the UK production business, supercharge streaming and optimize the broadcast business.

It said it has delivered £130M of the £150M cost savings target by 2026 and will hit this figure a year early, by next year. It is also in the “early stages of a strategic restructuring and efficiency programme across the group to reshape the cost base, enhance profitability, and support the growth drivers of Studios and Streaming.” By the end of 2024, it expects the programme to have delivered incremental annualised gross savings of at least £50M per year.

The results come in the wake of ITV’s shock sale of its half of streamer BritBox International to BBC Studios for around £255M ($322M).

ITV said it is exiting to focus on the growth of domestic streamer ITVX and its global ITV Studios division and will redirect efforts in that direction following the deal, which came relatively out the blue last Friday.

Rival Channel 4 is making 250 staff redundant including TV commissioners and ITV itself has implemented a recruitment freeze. There have been layoffs and closures across the UK production sector and two thirds of freelancers are out of work, according to broadcasting union Bectu.