TIDMITV
RNS Number : 0184L
ITV PLC
11 May 2022
ITV plc Q1 Trading Update for the 3 months to 31 March 2022
Carolyn McCall, ITV Chief Executive, said:
"ITV has achieved strong Q1 revenues driven by a robust
operational and financial performance with 23% revenue growth in
ITV Studios, a 16% increase in total advertising revenue as
expected and 24% increase in digital revenues.
"We are focused on the three core drivers of value for ITV. We
are growing Studios with a strong quarter and an exciting pipeline
of scripted and unscripted programmes as we further diversify the
business by genre, by geography and by customer and grow ahead of
the market. In Media and Entertainment, we maintained the strength
of our linear business where we secured 93% of the largest
commercial audiences. And we are making good progress in our goal
to supercharge streaming by increasing our hours of content by 50%
in the quarter to 6,000 hours and making available the majority of
scripted programmes in full for streaming at the same time as the
initial broadcast.
"All of this provides a solid foundation for ITVX - our free,
ad-funded streaming service - which is on track for launch in Q4
and we remain confident that we will deliver at least GBP750
million of digital revenue by 2026.
"We welcome the Government's recognition in the Media White
Paper of the huge value the Public Service Broadcasters (PSBs)
deliver to the UK and their determination to reform the legal and
regulatory framework to ensure PSBs, including ITV, have
prominence, inclusion and fair value for their content and
therefore are able to continue to thrive in the future."
Continued strong financial performance for the three months to
31 March
-- Total external revenue was up 18% at GBP834 million (2021: GBP709 million)
-- Total ITV Studios revenue was up 23% at GBP458 million (2021: GBP373 million)
-- M&E revenue was up 13% at GBP545 million (2021: GBP483
million), with total advertising revenue (TAR) up 16%
Operational update
ITV Studios:
-- Q1 was particularly strong with a wide range of new and
returning programmes and formats delivered in the UK and
internationally, including a number of programmes delayed from Q4
2021. Deliveries in Q1 included:
-- Holding, Why Didn't They Ask Evans, Noughts and Crosses S2,
Murder in Provence and Physical S2
Media and Entertainment:
-- Total advertising revenue (TAR) for 2022 has started well
-- TAR was up 16% for the three months to the end of March 2022
with good demand across the majority of advertising sectors.
January was up 15%, February up 20% and March up 15% compared to
the same period in 2021
-- Within this digital advertising revenue remains very strong,
up 27% to the end of March compared to the same period in 2021
-- Total non-advertising revenue for Q1 was down marginally with
good growth in subscription revenue offset by the expected decline
in SDN revenue and interactive revenues against tough comparatives
in 2021
Digital Acceleration: Delivering Phase Two of our More Than TV
strategy
ITV Studios:
-- ITV Studios has an exciting pipeline of scripted and
unscripted programmes in Q2 and the remainder of the year as we
further diversify the business by genre, by geography and by
customer and grow ahead of the market
-- Scripted is growing strongly with programmes such as
Snowpiercer (USA), The Outlaws (UK), The Suspect (UK), Django
(Italy) and Summertime (Italy)
-- Unscripted programmes expected to be delivered this year
include Hell's Kitchen USA, The Chase USA, as well as Love Island
in the UK, USA, Australia, Netherlands, Spain and Germany
-- Revenues from streaming platforms globally continue to grow
with development deals or commissions with most of the major
streaming platforms including Inganno and One Piece for Netflix,
Love Island USA for Peacock and a Benjamin Franklin drama for
AppleTV+
-- Our new labels set up through our recent talent deals have an
impressive slate of programmes including Night in Paradise from
Windlight Pictures for Starzplay, Nolly from Quay Street
Productions for ITV and Litvinenko from Patrick Spence for ITV and
Viaplay
-- We continue to focus on advancing our digital innovations in
ITV Studios to drive efficiencies and create a more sustainable way
of working. This includes remote and cloud based editing and
virtual production sets
Media and Entertainment:
Progress in the delivery of ITVX:
-- The launch of ITVX is on track for Q4 2022
-- Continuing to strengthen and evolve ITV's streaming experience with
-- Significant increase in the content available for streaming
with 6,000 hours of content, up from 4,000 at the end of December
2021
-- Warner content is now available including titles such as The
Sex Lives of College Girls, The OC and One Tree Hill
-- Majority of scripted programmes are available for streaming
in full at the same time as initial broadcast. This has helped
drive the best ever start to the year for drama viewing online with
125 million streams for the four months to the end of April, up 8%
year on year
-- Product developments including rolling out new features such
as start again, search improvements to improve accuracy, increased
personalisation such as onward journey recommendations and design
enhancements
-- Successfully working with distribution partners to ensure
that ITVX will be widely available at launch
-- BritBox UK has rolled out an exciting line up of new original
content, including Why Didn't They Ask Evans and Murder in
Provence, growing subscriptions since the beginning of the year
-- Planet V, ITV's leading addressable advertising platform, now
has in excess of 1,300 users (up from over 1,000 at 31st December
2021) and in Q1 attracted almost 50 new digital-only advertisers to
ITV
Key performance indicators
-- Total digital revenues grew 24% in Q1 with strong growth in
digital advertising revenues up 27% and subscription revenues up
37%
-- Total streaming hours on ITV Hub, ITV Hub+ and BritBox UK
were up 8% in Q1. ITV has taken the strategic decision to reduce
the availability of pre-transmission drama drops and box sets
outside of its own streaming services, such as on Sky and Virgin,
where we cannot serve and monetise dynamic advertising. Therefore,
this decision does not reduce existing revenues. Over time and with
the launch of ITVX we anticipate that we will see this viewing move
to ITV's streaming services and be more effectively monetised. The
transitional impact of this decision has been the overriding driver
of a 7% reduction in total streaming hours in the quarter, across
all platforms
-- We increased our share of linear viewing with ITV's share of
commercial viewing (SOCV) for the three months to the end of March
of 34.5% (2021: 34.1%)
-- ITV continues to deliver the majority of commercial mass
audiences with 93% share of top 1,000 commercial broadcast TV
programmes in Q1 (2021: 92%)
-- BritBox International is delivering good growth in
subscriptions in line with our plan across the US, Canada,
Australia and South Africa and the recent successful launch in the
Nordics including Sweden, Denmark, Norway and Finland
Driving positive change through our social purpose
priorities
-- ITV's Concert for Ukraine raised GBP13.4m for the Disasters
Emergency Committee's appeal for Ukraine
-- Launched two successful campaigns in the quarter - Eat Them
to Defeat Them to promote healthy eating and the ITV2 partnership
with CALM to support younger people's mental health
Outlook
-- ITV Studios is performing strongly and is on plan for the
year, taking advantage of the strong global demand for content
-- As expected, advertising comparatives get much tougher in Q2
and Q3 against the Euro Football championships in 2021 and we are
mindful of the macroeconomic and geopolitical uncertainty
-- Q2 2022 TAR, as expected, is forecast to be down around 6%
against strong comparatives in Q2 2021 when TAR was up 89% compared
to 2020. H1 is expected to be up around 5% compared to the same
period in 2021
-- April 2022 TAR was up 9% and we forecast May to be down
around 8% and June to be down around 15% compared to the same
period in 2021
-- Compared to 2019, Q1 TAR was up 12%, Q2 is forecast to be up
around 2% and H1 TAR is forecast to be up around 7%
-- ITV is well positioned to deliver ITVX, as a free, ad-funded
streaming service, with our deep relationships with advertisers,
strong demand for Planet V and a significant track record for
growing digital advertising revenues. We remain confident that this
will enable us to deliver at least GBP750 million of digital
revenues by 2026
-- We are on track to deliver our previously announced GBP17
million cost saving target for 2022
-- The 1 January 2020 actuarial valuation of the main section of
the ITV Pension Scheme was agreed during the period, with the
documentation currently being finalised. On the basis agreed with
the Trustee, the deficit as at 1 January 2020 amounted to GBP252
million, down from GBP489 million at 1 January 2017. The Group has
revised the existing deficit reduction contribution plan in order
to eliminate the deficit of GBP252 million (see notes to editors
for further details)
-- ITV's strong balance sheet and free cash flow generation
enables it to fund investments to deliver its digital acceleration
and returns to shareholders
NOTES TO EDITORS
1. Unless otherwise stated, all financial and operating figures
refer to the 3 months ended 31 March 2022, with growth compared to
the same period in 2021.
2. Group financial performance
Revenue for 3 months to 31 Change Change
March (GBPm) 2022 2021 GBPm %
============================ ====== ====== ======= =======
Media and Entertainment 545 483 62 13%
============================ ====== ====== ======= =======
ITV Studios 458 373 85 23%
============================ ====== ====== ======= =======
Total revenue 1,003 856 147 17%
============================ ====== ====== ======= =======
Internal supply (169) (147) (22) 15%
============================ ====== ====== ======= =======
Total external revenue 834 709 125 18%
============================ ====== ====== ======= =======
Note: 2021 comparatives have been restated to reflect the
reclassification of gaming, live events and merchandising revenues
from the M&E business to Studios. The impact is a GBP1 million
transfer from M&E to Studios.
Revenue for 3 months to 31 Change Change
March (GBPm) 2022 2021 GBPm %
============================ ====== ====== ======= =======
Total advertising revenue 468 402 66 16%
============================ ====== ====== ======= =======
Non-advertising revenue 535 454 81 18%
============================ ====== ====== ======= =======
Internal supply (169) (147) (22) 15%
============================ ====== ====== ======= =======
Total external revenue 834 709 125 18%
============================ ====== ====== ======= =======
3. Total advertising revenue (TAR), which includes ITV Family
NAR, digital advertising and sponsorship, was up 16% over the 3
months to the end of March. Within this, January was up 15%,
February up 20%, and March up 15% compared to the same periods in
2021. TAR is forecast to be down around 6% in Q2 against very tough
comparatives in 2021, which was up 89%. In 2022, April was up 9%,
and May is forecast to be down around 8% and June to be down around
15% compared to the same periods in 2021. Figures for ITV plc for
May and June are based on ITV estimates and current forecasts.
4. Media and Entertainment key performance indicators
Absolute Change
Three months to 31 March 2022 2021 change %
=============================== ======= ======= ========= =======
Total digital revenue (GBPm) GBP82m GBP66m GBP16m 24%
=============================== ======= ======= ========= =======
Total streaming hours (hrs) 247m 267m (20m) (7%)
=============================== ======= ======= ========= =======
Share of commercial viewing
(SOCV) 34.5% 34.1% 0.4pts
=============================== ======= ======= ========= =======
Share of top 1,000 commercial
broadcast TV programmes 93% 92% 1pt
=============================== ======= ======= ========= =======
-- Total digital revenue includes online advertising revenue and
subscription revenue as well as linear addressable revenue, digital
sponsorship and partnership revenue, ITV Win and any other revenues
from digital business ventures.
-- Total streaming hours measures the total number of hours
viewers spent watching ITV across all streaming platforms. This
figure includes viewing funded by digital advertising and
subscriptions.
-- ITV Family share of commercial viewing is the total viewing
of audiences over the period achieved by ITV's family of channels
as a proportion of all ad-supported commercial broadcaster viewing
in the UK. ITV Family includes ITV, ITV2, ITV3, ITV4, ITV Encore,
ITVBe, CITV, ITV Breakfast, CITV Breakfast and associated "HD" and
"+1" channels.
-- The share of top 1,000 commercial broadcast TV programmes KPI
includes TV viewing from transmission and seven days
post-transmission on catch up, as well as six weeks prior to the
transmission window. It excludes programmes with a duration of
<ten minutes. This metric is calculated as a two year rolling
average to normalise the impact of large sporting events.
-- % change for performance indicators is calculated on rounded numbers.
5. Total Studios organic revenue at constant currency was up 24%
at GBP461 million for the first 3 months of 2022, with a GBP3
million adverse impact from foreign exchange over the period. Our
definition of constant currency assumes exchange rates remain
consistent with 2021.
6. ITV continues to have good access to liquidity and its
financial position remains robust. At 31 March 2022, reported net
debt ([1]) was GBP435 million (31 Dec 2021: GBP414 million) and ITV
had total liquidity of GBP1,395 million, comprising total cash of
GBP747 million (which includes GBP50 million of restricted cash)
and committed undrawn facilities of GBP648 million.
7. The 1 January 2020 actuarial valuation of the main section of
the ITV Pension Scheme was agreed during the period, with the
documentation currently being finalised. On the basis agreed with
the Trustee, the deficit as at 1 January 2020 amounted to GBP252
million, down from GBP489 million at 1 January 2017. The Group has
revised the existing deficit reduction contribution plan in order
to eliminate the deficit of GBP252 million. We expect the deficit
reduction contributions to be around GBP40 million in 2022, GBP43
million in 2023, GBP48 million in 2024 and GBP28 million in 2025.
The deficit funding contributions are driven by the actuarial
deficit valuation, and not the accounting (IAS19) valuation.
In 2010, ITV established a Pension Funding Partnership (PFP)
with the Trustees backed by SDN, which was subsequently extended in
2011. The PFP addressed GBP200m of the funding deficit in Section A
of the defined benefit pension scheme and under the original
agreement, a payment of up to GBP200m was due in 2022. ITV has
agreed in principle with the Trustee to extend and amend the
existing PFP agreement to 2031, such that the Scheme will receive
through the arrangement an upfront payment of GBP80 million in 2022
and up to nine annual payments of GBP16.4 million starting in 2023.
In 2022, ITV will make a total payment under the SDN PFP
arrangement of GBP94 million as there will be a payment of GBP14
million in respect of the final income payment due under the
original agreement.
The net pension surplus of the defined benefit schemes at 31
March 2022 on an IAS 19 basis was GBP162 million (31 December 2021:
GBP8 million deficit). The movement in the quarter is a result of
an increase in corporate bond yield and funding deficit
contributions, partly offset by a decrease in asset values and
increased in market implied inflation.
We have received a warning notice from the Pension Regulator
(tPR) in relation to the Box Clever Pension Scheme for the amount
of GBP133 million. Our view with regards to this matter remains as
set out in note 3.5 in the Annual Report and Accounts for the year
ended 31 December 2021. We will continue to engage with tPR to
resolve the matter.
8. Figures presented in this Trading Statement are not audited.
This announcement contains certain statements that are or may be
forward-looking statements. Words such as "targets", "expects",
"aim", "anticipate", "intend", or the negative of these terms and
other similar expressions of future performance or results, and
their negatives, are intended to identify forward-looking
statements. These forward-looking statements are based upon current
expectations and assumptions regarding anticipated developments and
other factors affecting ITV. Although ITV believes that the
expectations reflected in these forward-looking statements are
reasonable, it can give no assurance that these expectations will
prove to have been correct. By their nature forward-looking
statements involve risk and uncertainty because they relate to
events, and depend on circumstances that will occur in the future.
They are not historical facts, nor are they guarantees of future
performance; actual results may differ materially from those
expressed or implied by these forward-looking statements. There are
a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by such forward-looking statements. These factors include, but are
not limited to (i) the general economic, business, political,
legal, regulatory and social conditions in the key markets in which
the Group operates, including the duration and severity of COVID-19
impacts on ITV's colleagues, business, partners and customers, (ii)
a significant event impacting ITV's liquidity or ability to operate
and deliver effectively in any area of our business, (iii) a major
change in the UK advertising market or consumer demand, (iv)
significant change in regulation or legislation, (v) a significant
change in demand for global content, and iv) a material change in
the Group strategy to respond to these or any other factors.
Certain of these factors are discussed in more detail in ITV's 2021
Annual Report and Accounts including, without limitation, in the
description of ITV's approach to risk management.
Forward-looking statements speak only as of the date they are
made and, except as required by applicable law or regulation, ITV
undertakes no obligation to update any forward-looking statements,
whether written or oral that may be made from time to time, whether
as a result of new information, future events or otherwise. Nothing
in this statement should be construed as a profit forecast.
For further enquiries please contact:
Investor Relations
Pippa Foulds +44 20 7157 6555 or +44 7778 031097
Sarah Comfort +44 20 7157 6486
Media Relations
Paul Moore +44 7860 794444
Jenny Cummins +44 7595 106670
([1]) Net debt is defined as total loans and facilities
(including cross currency interest rate swaps held against
euro-denominated borrowings) and lease liabilities less total cash
and cash equivalents and restricted cash.
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