ITV is to launch a revamped streaming service in its latest attempt to retain viewers, although an associated jump in costs intensified concerns about the threat deep-pocketed US rivals pose to the UK broadcaster.
Shares in the FTSE 100 media group dropped 14 per cent on Thursday as a decline in viewers and a diminished profits outlook overshadowed a rebound in annual revenues and plans for its “ITVX” platform.
Alongside the results and strategy update, ITV said it would stop selling adapted versions of shows, including I’m A Celebrity Get Me Out Of Here, to clients in Russia. In addition, the London-based company said it had asked broadcasters in the country to stop showing programmes they had already commissioned from ITV, although it could not confirm if they swould do so.
ITVX, which chief executive Carolyn McCall said would help “supercharge” the company’s streaming offering, will replace its existing domestic online services, ITV Hub and ITV Hub+. Viewers will have the choice of streaming for free or paying for an ad-free premium offering.
As part of the shake-up, analysts said Britbox, a joint venture with the BBC, would become less prominent. ITV disclosed in its results statement that the BBC had sold its 10 per cent stake in the project.
Britbox service
The Britbox brand will remain in the UK, but within ITVX and not as a standalone app. It will remain as a separate platform in other markets.
ITV said it planned to invest £1.23 billion (€1.48 billion) in programmes this year – higher than its previous guidance of £1.16 billion (€1.4 billion) – and £1.35 billion (€1.63 billion) next year. Premiers are to be shown on ITVX in a new “digital first” content strategy.
The company also set out a range of data and technology costs, as well as expenses associated with setting up ITVX.
Ms McCall said ITV was making the investments from a “position of financial and creative strength”. The company set a goal to at least double its digital revenues to £750 million (€906 million) by 2026.
The chief executive, who joined from EasyJet four years ago, has found some success pushing into digital and also expanding its production arm, ITV Studios, which makes shows for other broadcasters around the world including Line of Duty. She said the plans marked the second phase of her “More than TV” strategy.
However, the update brought back to the fore longstanding investor concerns about ITV’s ability to stop viewers switching to pay-TV rivals and online.
Britain’s biggest free-to-air commercial broadcaster said viewers last year watched 15.1 billion hours on ITV Hub as well as its linear channels – a decline of 9 per cent from 2020, when lockdown restrictions encouraged more consumers to binge on TV.
Forecasts
As a result of the higher costs, consensus forecasts for operating profit next year were set to drop from £800 million (€966 million) to £550 million (€664 million), she said.
Despite the decline in viewers, a rebound in advertising from the depths of the pandemic and sales of content to other broadcasters helped ITV’s annual revenues rise from £2.78 billion (€3.36 billion) to a record £3.45 billion (€4.17 billion).
Pre-tax profits improved from £325 million (€392 million) to £480 million (€579 million) and the board proposed a final dividend of 3.3p a share.
– Copyright The Financial Times Limited 2022
