What Has Led To A Faster-Than-Expected Recovery At ITV?

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What Has Led To A Faster-Than-Expected Recovery At ITV?

 What Has Led To A Faster-Than-Expected Recovery At ITV?


  • Cinema, out-of-home, and print advertising contracted with the introduction of lockdown measures globally
  • With Christmas arriving, the striving retailers will kick off high-stakes festive advertising campaigns despite severe trading conditions
  • ITV PLC (LON: ITV) has registered a faster-than-expected recovery with ad revenues in line with previous year’s performance in the final three months of 2020
  • The external and ITV Studios’ revenue recorded by the company declined 16 per cent and 19 per cent respectively for the period

The Covid-19 pandemic has forced the advertisement industry to revaluate itself, prompting a quick drop in the advertising spends. The expense on advertisement has dropped in line with the shifting consumer behaviour. Ads at the cinema halls, out-of-home, and the printing medium fell as lockdown measures were imposed across the world.

At the same time, utilization of in-home media experienced a boom. Television viewership moved up while digital consumption expanded even more. Use of social platforms, streaming services, and gaming spurt internationally, displaying a sharp growth. Digital advertising was thus adopted at a large scale by the advertisers.

Large family gatherings and social occasions are probably going to be forbidden for some more time and the party season has also vanished for the time being.

But coronavirus cannot prevent Christmas from arriving as striving retailers kick off high-stakes festive ad campaigns despite severe trading conditions.

Amidst the pandemic when all the advertisers are waiting for the Christmas season to showcase recovery, ITV PLC (LON: ITV) has registered a faster-than-expected growth in ad revenues for the third quarter the financial year 2021.

Established in 2003 as an integrated producer broadcaster (IPB), ITV is engaged in creating and distributing content on various platforms worldwide. The London-headquartered company operates through two segments- Broadcast & Online and ITV Studios.

On 12 November 2020, ITV PLC released its trading update for Q3 2020 ending 30 September 2020. Let us now focus on the details of these updates:


Financial Highlights

The total external revenue and total ITV Studios revenue recorded by the company plummeted by 16 and 19 per cent for the period, recording values worth £1,860 million (2019: £2,209 million) and £902 million (2019: £1,116 million) respectively.

The company’s broadcast revenue was also down 13 per cent at £1,270 million (2019: £1,464 million). The total advertising revenue for ITV plunged by 16 per cent for the period.

However, the online revenue jumped by 2 per cent and the total viewing of ITV was also up by 2 per cent, recording an increase in live viewing.

Although monthly active users grew 1 per cent and dwell time was up by 6 per cent, ITV’s online viewing declined by 6 per cent.

Family's SOV (share of viewing) of ITV plummeted 4 per cent. This was partially affected by the news output volume of BBC during the coronavirus crisis.


Operational Updates

  • Eighty-five per cent of the 230 productions that were hampered by the lockdown were back in operation. The production teams had been continuously working towards innovation.
  • The autumn schedule of ITV had been catering to mass audiences and key demographics.
  • With a view to create effective marketing solutions, ITV commercial had been working closely with advertising companies.
  • There was an improvement in advertising trends in third quarter with total advertising spend down 7 per cent YOY.
  • Interactive revenues were significantly robust with demand for ITV's competitions witnessing an increase.


Strategic Priorities

  • Restructuring the broadcasting division with creation of two new business segments, namely broadcast and on-demand
  • Reinforcing the ITV Hubli by upgrading its content and user experience
  • Successful launching of Planet V, a self-serve platform within the media agencies


Management’s Take

ITV’s Chief Executive, Carolyn McCall said that both the divisions were showing encouraging signs. Improvements in advertising trends have resulted the fourth quarter’s forecast to be slightly up on a year on year basis.

Production in the UK and internationally, which had shut down due to coronavirus pandemic, has successfully resumed. However, further national lockdown restrictions have led to raised production costs.

McCall said that the company remained focused on executing its More Than TV strategy as it shifted towards digital transformation.

Restructuring of its broadcast business was taking place with the aim to create a new division of media and entertainment to foster the changing consumer needs.

The restructuring would result into improvements in efficiency and reduction of costs, she informed.

The company is looking forward to continuously monitoring its performance given the ongoing uncertainty. ITV had been particularly focussed on its cash and expenses during Q3, according to the management.



Though ITV Studios has resumed its production, the second national lockdown measures will continue to affect the revenue in the next quarter. However, it is in accordance with the company expectations.

The revenue from total advertising is projected to be slightly up YOY in Q4, with a 6 per cent increase projected in November 2020, as compared to the same period in 2019.


Stock Performance

The stock of ITV plc was trading at GBX 92.70 on 13 November 2020, at 2:27 PM, 3.28 per cent higher from its previous close of GBX 89.76. The stock’s low/high price range for 52-weeks was GBX 54.42/156.50.

ITV had a total market capitalisation (Mcap) of £3,613.21 million. The company has recorded a negative YTD price return of 40.52 per cent.



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