ITV’s efforts to increase revenues do not excite the City

My last blog spoke about Commercials TV stations’ efforts to address a drop in potential Linear TV revenues by shoring up new revenue streams.   ITV has recently introduced BritBox, an additional revenue stream, in conjunction with the BBC (see blog from my colleague Richard Huglin).  Despite these efforts City investors still do not seem impressed?

ITV hit a peak with its share price of 280p 4 years ago, dropping to 172p in 2018, while this year it has ranged from 105p – 126p.  Yet following its half year results (110p on 30th June), ITV has recently seen its share price bounce by 6%.  According to the expert eye, the key indicators looked unfavourable:  Ad revenue -5%, studio revenue -6% (despite heavy investment in production), and total viewing -6%.

So why this sudden turn for the better? 

There are three reasons –

  1. The y-o-y drop in Ad revenues compared to the World Cup last year are less than first feared.
  2. Online viewing is up 13%, closing in on online revenues +18%.
  3. New inroads mainly c/o ITV2 (this station targets younger audiences with programmes such as Love Island and is succeeding among the very hard to reach/valuable 16-34’s:  ITV2’s  share of viewing is +6.5%,  and 81% of 16-34’s are registered with its VOD platform, the ITV Hub.

So successful has Love Island been that ITV is introducing a second series per year, and no wonder! Brands looking to be involved with ITV have announced that merchandising and sponsorship revenues were £8m more than last year.  In fact, last year Superdrug paid £2.25m for sponsorship rights, yet this year they found ITV’s opening price of £3.5m too rich for them.  This did not stop 9 other advertisers competing in a bidding war, which drove price paid by the eventual winner, Uber Eats, up to £5m.

On top of this, the City’s lack of enthusiasm for ITV is strange given –

  • 500,000 new subscribers to ITV HUB+

ITV’s investment into the subscription market ITV Hub+ has generated over 500,000 subscribers –  each paying £3.99/month; 

  • UK Launch of BritBox, Q4

This significant step will extend ITV’s digital reach and UK revenue base.  (nb. In the US subscriptions to BritBox show substantial y-o-y gains, and current reach is 650,000).

Since both platforms are looking good for growth, why do City analysts and investors appear to show little interest?

John Alligan

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