ITV shares were weaker on Thursday as the UK media giant revealed advertisers reduced spending in the first quarter and their studio’s business flatlined.
ITV’s total external revenue for the first quarter fell 7% to £776m with media and entertainment revenue sinking 9%. Their studio’s business revenue was flat at £457m.
Total advertising revenue for the period fell 10% to £419m.
“ITV’s first quarter held few surprises. Double digit declines in advertising revenue were expected, but these are due to get worse in the new quarter. That reflects the very real challenges that come with relying on above-the-line spending during times of economic stagnation,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Although the wider media and entertainment unit’s revenue fell, the new streaming service ITVX continued to build momentum and total digital revenue rose 29% while total streaming hours through the service were up 49% in Q1.
“ITV is throwing a lot at its digital transformation, and digital advertising revenue is proving more resilient. However, this isn’t enough to stem losses elsewhere, showing how deeply rooted ITV still is in traditional broadcasting,” Lund-Yates said.
“Studios revenue is on track to deliver mid-single digit revenue growth. This area of the business is sitting on a well of future demand thanks to the huge swell in appetite for content from other providers. There are tricky elements to deal with in content creation though. It’s a very tough business in which to inflate margins, and is a large reason ITV’s operating profit expectations have been dialled back.”
ITV shares were 4.5% weaker at the time of writing.