ITV revenues hit by US actors' and writers' strike

(Sharecast News) - Broadcaster ITV reported a fall in first-quarter revenues on Thursday, dragged lower by the production arm which was hit by the US writers' and actors' strike. In the three months to the end of March, total revenue declined 7% to £887m, with growth in total ad revenue offset by a 16% slump in revenues to £382m at ITV Studios, which reflected the phasing of deliveries and the expected impact of the US strike.

ITV Studios revenue was also hit by weaker demand from free-to-air broadcasters in Europe, who have been holding back spend until they see more certainty in the advertising market, the company said.

Total advertising revenue grew 3% in Q1 to $432m, in line with guidance. ITV said it expects good momentum to continue into the second quarter, benefitting from the Euros in June.

Chief executive Carolyn McCall said: "Over the full year we expect ITV Studios revenues to be broadly flat. We have a strong pipeline of programmes, good demand for our quality content as we increasingly diversify our customer base towards streamers and the phasing of deliveries is heavily weighted to the second half of the year, including Hell's Kitchen US, The Better Sister, A.C.A.B, Showtrial and Ludwig.

"ITVX continued to build on its strong first year and delivered double-digit growth in both digital viewing and digital advertising revenues in Q1 and we expect continued strong growth in both throughout the year."

At 0930 BST, the shares were up 2% at 75.80p.

Russ Mould, investment director at AJ Bell, said: "Facing a structural decline in traditional TV viewership and advertising, ITV is diversified in two areas. One of these - streaming and digital advertising - contributed strongly to its first-quarter performance, but the other - the ITV Studios production arm - detracted.

"Given this was largely thanks to an event which was completely outside of ITV's control - the long-running US writers' strike which eventually concluded last autumn - it is understandable that it is being given the benefit of the doubt by investors. That might change if the promised recovery in the second half of the year doesn't come through.

"The company's digital strategy looks to be delivering. ITVX got a negative reception when it was first announced a little over two years ago but the platform is attracting users and advertising at an impressive rate, helping to make up for declining traditional ads.

"The Euros football tournament this summer will provide the usual kicker to advertising spend and ITV is looking to become a more streamlined and focused operation. For example, it is taking out costs and sold its Britbox International joint venture earlier this year.

"It's a long road back for ITV to the share price highs achieved in the mid-2010s, after a previous turnaround under Adam Crozier, but there is evidence of genuine progress."