ITV looks to World Cup to boost advertising after profits slump
ITV, the UK’s leading commercial broadcaster, has posted a fall in profits and television advertising for 2017, in what proved to be a difficult economic climate, but foresees better results this year.
New chief executive Carolyn McCall (pictured) said yesterday that advertising revenue is expected to be up by 1 per cent in the first quarter, with the Fifa World Cup, which starts in mid-June towards the end of the second quarter, to deliver further growth.
ITV shares live rights to the tournament with the BBC, the UK’s public-service broadcaster, which does not carry advertising.
ITV's share price fell by nearly 8 per cent as the broadcaster announced that pre-tax profits had declined by 9.6 per cent to £500 million ($687 million) last year.
This has been attributed to “ongoing economic and political uncertainty,” with a weaker pound, in the UK, as the country prepares to leave the European Union in 2019.
TV advertising revenue, which customarily accounts for around half of ITV’s turnover, dropped by 5 per cent to £1.6 billion, although its share of the market was up marginally, from 47.4 per cent to 47.6 per cent.
Other revenues rose by 11 per cent, from £1.8 billion to £2.1 billion.
McCall, formerly the chief executive of budget airline EasyJet, succeeded Adam Crozier at ITV in January.
She said on Wednesday: “The uncertainty has undoubtedly had an impact on the demand for television advertising and therefore as expected ITV's financial performance.”
However, McCall added that the broadcaster had enjoyed “a great start to 2018,” citing an increase in its share of the TV audience and double-digit growth in online viewing.
ITV’s programming budget is set to rise by £75 million, to £1.1 billion, between 2017 and 2019 because of extra investment in drama and sports rights.
The broadcaster’s main sports properties include live rights to the England soccer team’s home matches, UK horse racing and top boxing fights, many of which are now offered on a pay-per-view basis via the ITV Box Office service.
McCall said: “There is no doubt that ITV’s operational performance in 2017 in a challenging environment was strong. We are very focused on our strategic refresh. This will enable us to define a clear strategy and priorities that will highlight the opportunities and address the challenges that we face in an increasingly competitive media landscape. This project is well under way.”