Interactive Investor

ii view: ITV shares sold on weak advertising demand

Shares in this FTSE 250 company fell 32% in 2022 and remain on the backfoot this year. Offering an attractive dividend yield, we assess prospects.

8th November 2023 11:42

by Keith Bowman from interactive investor

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Nine-month trading update to 30 September

  • Media & Entertainment revenue down 7% to £1.46 billion
  • Studios revenue up 9% to £1.52 billion
  • Total revenue up 1% to £2.98 billion
  • Net debt of £739 million, up from £724 million in Q2


  • Expects full-year Total Advertising Revenue to be down around 8% versus 2022, down from a previous fall of 6%
  • Expects to reduce total content spend for the full-year by £10 million

Chief executive Carolyn McCall said:

"ITV continues to make good strategic progress despite the challenging macro environment which is impacting the advertising market and also the demand for content from free-to-air broadcasters in the UK and internationally.

"It is evident that our strategy of growing the Studios and M&E digital business is helping ITV to offset the current headwinds and we remain confident in delivering our 2026 targets, when we expect two-thirds of revenue to come from these growth drivers."

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ii round-up:

Broadcaster and programme maker ITV (LSE:ITV) today lowered its forecast for full-year advertising revenue estimate, given the continued challenging economic backdrop and the tough comparison following last year's football World Cup. 

Total Advertising Revenue (TAR) for the full year is now expected to be down around 8% compared to that generated in 2022. That's also lower than management’s previous estimate of a 6% fall. City analysts had been forecasting a 6.5% year-over-year decline.

Shares in the FTSE 250 company fell by more than 6% in UK trading having come into this latest news down by just over a tenth year-to-date. Global streamer Netflix Inc (NASDAQ:NFLX) is up by almost a half during 2023, while the FTSE 250 index itself is down 5.6%.  

Revenue at ITV’s Media and Entertainment division, which airs content via both traditional linear TV broadcasting as well as via its digital on-demand platform ITVX, fell 7% to £1.46 billion. Pressured advertising sales now see ITV reducing its annual spend on media content by £10 million from previous expectations of £1.29 billion. 

Revenue at its programme making studios business, whose hits include WWII drama ‘World on Fire’ for the BBC, rose 9% to £1.52 billion. But annual revenue for the division is expected to grow just 3% from 2022, down from prior year growth of 19% given reduced demand from free-to-air broadcasters considering the ongoing challenging advertising market. The company also warns that the US writers' and actors' strike will defer revenue from 2024 into 2025.

Full-year results will likely be announced early March. 

ii view:

A constituent of the FTSE 250 index, ITV operates the largest commercial family of UK channels. Employing over 7,000 people, its Media and Entertainment business including its streaming operation generates its biggest slug of revenues at around three-fifths, with its programme making Studios division accounting for the balance. Group strategy includes expanding its UK and global studios production business, growing its streaming business now under the ITVX platform and optimising its Broadcast business.

For investors, the challenging economic backdrop and its impact on advertising sales is not to be overlooked, and the importance of the sporting calendar in generating ad sales should ot be underestimated. A push towards streaming via ITVX leaves it competing against global players such as Netflix, The Walt Disney Co (NYSE:DIS), and Amazon's (NASDAQ:AMZN) Prime TV, while content production at the Studios division also leaves it toe-to-toe with these same global players. 

On the upside, a diversity of revenues exists, from programme content sales to monthly streaming subscription fees for ITVX and advertising sales. This current financial year is expected to prove the peak in investment costs for its streaming business. Cost reduction remains a core management focus, while an estimated one-year price/earnings (PE) ratio comfortably below media rivals such as Netflix may suggest the stock is not expensive.

ITV shares have struggled for years, with rare improvements in sentiment giving shareholders only the odd glimmer of hope. Meanwhile, a yield of over 7% might tempt income seekers, although that figure is flattered by a falling share price. Speculators might bet that the bad news is already in the price, but fierce competition might keep others on the sidelines until evidence of a sustained recovery emerges. 


  • Diversity of revenues
  • Attractive dividend (not guaranteed)


  • Intense global competition
  • Advertising revenues are economically sensitive 

The average rating of stock market analysts:


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