ITV shares plunged on Wednesday as the broadcaster and content creator said the advertising market continued to face difficulties in the post-COVID environment.
ITV shares had dropped by 5.2% to 61.8p at the time of writing.
ITV further announced on Wednesday that lower demand from British and international broadcasters for its content will affect its studio business in Q4, leading to lower-than-anticipated growth for the unit in 2023.
Shares in the free-to-air broadcaster are nearing levels last observed during the initial market downturn during the COVID-19 pandemic. According to AJ Bell investment director Russ Mould, “it’s just the “evidence of just how tough the advertising market continues to feed through.”
The digital segment of the business is sustaining advertising revenue more effectively, indicating a more loyal and measurable audience. The Studios division is showing strong performance. However, according to Russ Mould, these are not sufficient to make up for the poor performance of old-fashioned TV.
ITV has been working to diminish its dependence on conventional operations by expanding its digital footprint, which includes the introduction of the ITVX platform, and by investing in the ITV Studios production division.
Russ Mould further stated that “scaling back marketing is often a go-to strategy when businesses are confronted with tough economic times. The company’s linear TV looks like a particular victim, as the format is less appealing to advertisers and the amount of eyeballs watching ‘live’ continues to decline.”
“Cost cuts can take the business so far, but they can also damage the product and the brand—a similar conundrum faces Daily Mirror and Daily Express publisher Reach, which announced further job cuts today,”, he added.
Analyst price forecast compiled by the Financial Times forecast, ITV plc has a median target of 102.50p, with a high estimate of 121.00p and a low estimate of 49.00p.