Concern’s remain over ITV’s advertising revenue streams in the long-term
ITV (LON:ITV) confirmed it received its highest advertising revenues in its near 70-year history as the UK broadcaster emerged from the coronavirus pandemic.
ITV confirmed that its advertising revenue for June surged by 115% year-on-year, as its total revenue rose by 25% over the first six months of 2021 to £1.8bn.
Its broadcast revenues initially took a big hit when the pandemic happened as large companies were forced to reign in their levels of spending. There has been a reversal in this trend as the economy has opened back up as businesses are now competing for position.
“A bullish set of results from ITV shouldn’t come as a surprise. The reopening of the economy is a natural driver for companies to increase advertising and so ITV’s associated revenue has grown by a decent rate,” said Danni Hewson, financial analyst at AJ Bell.
The company’s blockbuster show Love Island is back on the nation’s screens, “which means another rush by advertisers to bag a slot in the commercial breaks,” said Danni Hewson, financial analyst at AJ Bell.
While there has been a shot-term spurt of growth, Hewson remains less convinced over the UK broadcaster’s outlook.
“This is fine now, but ITV’s position longer term remains uncertain. There is structural shift of advertising away from TV and towards online channels.”
“ITV may have done well in the past year thanks to people being at home during the pandemic and who, having exhausted everything on Netflix, found themselves watching traditional TV channels again.”
“However, there is a real risk that was a one-off event, and streaming programmes and films on-demand will rule once more. That places even more pressure on ITV to come up with must-watch shows. As such, it will have to plough significant amounts of money into the studios arm to enrichen its content,” said Hewson.
Just before 11am on Wednesday, the ITV share price is pretty much unchanged from yesterday’s close, sitting at 119.38p.