ITV (LON:ITV) has provided its Q3 Trading Update for the 9 months to 30 September 2019.
Carolyn McCall, ITV Chief Executive, said:
“ITV’s overall performance for the first nine months of 2019 was as we expected, and although the economic environment continues to be uncertain, we are making good progress in executing our strategy. We have successfully launched BritBox and are encouraged by the positive feedback received on the service so far. We have also agreed a distribution and marketing deal with BT and EE and a content partnership with Channel 4. Development of our addressable advertising platform is on track for a roll out to media agencies in Q1 2020.
“ITV Studios’ performance in 2019 will benefit from a very strong second half delivery schedule and our Q3 performance reflects this, with good growth across the business, particularly from ITV America with Love Island US and the part delivery of Hell’s Kitchen and Snowpiercer. We expect this performance to continue in Q4, and over the full year we are confident that we will deliver at least 5% growth in ITV Studios’ total revenues at a margin of 14% to 16%.
“The phasing of deliveries in the second half of 2019 will adversely impact ITV Studios’ performance in 2020 although we continue to expect that over the medium term ITV Studios revenues will grow by at least 5% CAGR with a 14% to 16% margin. We continue to build our creative pipeline and have a strong slate of new and returning programmes in the UK and internationally for both broadcasters and OTT platforms, including The Serpent, Zero Zero Zero, Suburra, Crank Yankers, Queer Eye, Saturday Night Takeaway, and Love Island globally.
“On screen and online viewing performed well with highlights including four of the five highest rating new dramas so far this year and the Rugby World Cup which saw a peak audience of 12.8m viewers during the final. We have reached our 2021 target of 30m registered users on ITV Hub ahead of plan. We have an exciting schedule for the remainder of the year and into next year, including I’m A Celebrity… Get Me Out of Here!, Sticks and Stones, England qualifiers for the 2020 European Football Championships, The Masked Singer, Flesh and Blood, and the return of Saturday Night Takeaway and Liar.
“Online revenues continue to grow strongly, up 23% for the first nine months. Total advertising revenue was up 1% in Q3, at the top end of our guidance. We expect Q4 to be flat to up 1%, and as a result to be down around 2% across the full year.
“Our cost programme is on track to deliver £20m of savings this year and £55m to £60m over the four years to 2022. We are confident in delivering our 2019 full year guidance.
“We remain very focused on building a digitally led media and entertainment company to create a stronger, more diversified and structurally sound business. We have a solid balance sheet which enables us to make the right investment decisions and deliver returns to shareholders in line with our guidance of at least an 8p dividend for 2019.”
Performance for the 9 months in line with our expectations
· Total external revenues down 2% at £2,209m (2018: £2,257m)
· Total ITV Studios revenue up 1% at £1,116m with organic growth flat, at constant currency
· Broadcast & Online revenue down 3% at £1,464m (2018: £1,509m) with ITV total advertising down 3% as guided and online revenues up 23%
Continued good performance
· ITV Studios delivered a successful slate of new and returning programmes in Q3, with a strong Q4 expected, particularly in the US
· Continued good viewing onscreen and online, with ITV Family share of viewing maintained and online viewing up 10% against tough comparators of the Football World Cup last year
· Strategy progressing well;
o BritBox successfully launched and we have agreed a distribution and marketing deal with BT and EE and a content partnership with C4.
o Currently in the testing phase of the programmatic addressable advertising platform, Planet V
o ITV Hub has reached its target of 30m registered users two years early
On track to deliver our full year guidance
· Confident that ITV Studios will deliver revenue growth of at least 5% at a 14% to 16% margin
· The phasing of deliveries in the second half of 2019 will adversely impact ITV Studios’ performance in 2020 although we continue to expect that over the medium term ITV Studios revenues will grow by at least 5% CAGR with a 14% to 16% margin
· Total advertising revenue forecast to be down around 2% for the full year
· Will deliver double-digit revenue growth in Online, and revenue growth in Direct to Consumer
· Network programme budget (NPB) will be £1,090m in 2019, £10m lower than previous guidance due to the timing of European qualifier games, some of which will broadcast in 2020 and therefore the NPB in 2020 will be £1,110m
· Cost programme on track to deliver £20m of savings in 2019
· We will maintain a solid balance sheet and deliver on our full year dividend guidance of at least 8.0p per share