ITV boss Dame Carolyn McCall was wary of how the broadcaster would operate in the run-up to Christmas. Credit: EMMANUELLE DUNAND/AFP via Getty Images
ITV's chief executive has warned that the current advertising downturn is the worst since the 2008 financial crisis.
Dame Carolyn McCall said the broadcaster is struggling with ” very tough” advertising market, which affected both its earnings and share price.
She said: “Even though we are a global company, most of our business is in the UK so the catalyst will be consumer confidence, business confidence, lower interest rates, lower inflation and much better advertising markets.
” This is the worst advertising recession we've seen since the global financial crisis this half of the year.”
Comments will fuel recession fears as growth stalls and the Bank of England continues to raise interest rates to fight inflation.
Advertising is often seen as a harbinger of a broader economic downturn as it is the first sector to be hit by cost cuts.
According to figures released today by the Advertising Association, UK advertising spending was flat in the first quarter and in 2023 year the market will grow by only 2.6%. This compares with a 3.9 percent decline at the height of the financial crisis in 2008.
James MacDonald of advertising industry organization WARC said: “With the economy flat in the past three years and inflation remaining consistently high, macroeconomic headwinds continue to weigh on the UK advertising industry.”
ITV's total advertising revenue. fell 11% in the first half of the year to £811m as brands cut spending.
Pre-tax profits fell more than 60% to £118m, with the drop in ad revenue exacerbated by investments in ITVX company. streaming service.
The state broadcaster said it expects the advertising market to improve in the third quarter thanks to major sporting events, including the Women's Rugby World Cup and the return of the popular reality show Big Brother.
The announcement predicted that in July, revenue will decrease by another 4%, and will grow by 7% next month.
But Ms. Carolyn was more cautious about the prospects for a crucial fourth quarter ahead of Christmas, saying it was too early to tell how the market would perform.
She said, “We just can.” I'm not telling you that everything will be fine because we don't know it yet. We had the World Cup last year, so we know our comparatives are going to be very, very difficult anyway.”
Overall group revenue is down 1% to just under £2bn sterling, due in part to a decline in advertising. offset by the broadcaster's strong production business.
ITV Studios posted 8% revenue growth to reach £1bn for the first time thanks to international sales of shows like Love Island and Come Dine With Me. More than a quarter of the studio's revenue comes from deals with streaming services, while most of the shows have been sold to rival broadcasters.
ITV is looking for ways to reduce its reliance on advertising and resume growth after more than five years, its share price has fallen by more than 50%.
Earlier this month, the bosses pulled out of talks to buy Gogglebox and The Traitors producer All3Media in a potential £1bn deal that would further expand its production capabilities.
Ms Carolyn declined to give details of why negotiations broke down. She said ITV would continue to explore potential takeover opportunities but insisted the company was not pursuing “scale for the sake of scale.”
The broadcaster hailed ITVX's strong results, which helped boost digital ad revenue by 24%. to £218m.
Last year, ITV spooked investors by announcing a huge investment in the streaming platform, a key part of its goal of achieving at least £750m in digital revenue by 2026.
ITV said it had so far had no impact on the strike of Hollywood actors and writers. However, executives said there could be some delays in U.S. production of the script if the strikes continue into the fall.
The broadcaster maintained its mid-single-digit revenue growth forecast for 2023. It announced an interim dividend. of 1.7p and stated that it remains committed to paying a total dividend of at least 5p for the full year.
ITV has also said it aims to cut costs by £15m this year as part of a plan to cut costs by £50m between 2023 and 2026. Shares are up more than 4%.
Dame Carolyn said: “We are still on track to meet all of our KPI targets, which gives us confidence that we will achieve at least 750 million by 2026. pounds of digital income.
“As we said at the end of the year, March 2023 is the peak year for net investment in our streaming business, and we expect earnings to grow from there.”
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