“This is the worst advertising recession we’ve seen since the global financial crisis [in 2008],” ITV CEO Carolyn McCall has warned after the UK’s biggest commercial broadcaster suffered a double-digit drop in ad revenue.ITV posted a 2% decline in overall revenue in its quarterly earnings, down to £1.64bn, with total advertising revenue down 11% to £811m.However, the third quarter is forecast to return to growth. Compared to the same period in 2022, total ad revenue is expected to be down 4% in July 2023 and up 7% in August. ITV said it is too early to give a forecast for September, but “early signs are positive” based on the conversations with media agencies.ITV Studios, which is has become the largest source of revenue for ITV, grew 8% to £1bn. Digital revenue also grew 24% to £218m, helped by the launch of ITVX (a replacement for ITV Hub) at the end of 2022.The streaming service’s monthly active users were recorded as 12.5 million, up 29% year-on-year on ITV Hub. Live viewing on ITVX has almost doubled to 93%, the broadcaster mentioned in a press conference after this morning’s early release, without confirming a timescale, while “dwell time” was up 22%.Speaking to journalists this morning, ITV CEO Carolyn McCall insisted the broadcaster does not envisage “any change” in conversations with advertisers about the traditionally lucrative pre-Christmas period. She insisted it is “impossible to have visibility” on how the market will fare in the fourth quarter of this year, despite major advertisers traditionally planning media buys for Christmas TV ad campaigns several months in advance.McCall suggested that underlying demand from advertisers is still strong, but that “caution” was holding many back from spending. “They are cautious because the [economic] outlook is cautious around interest rates.”She added: “There is no change in the way [advertisers] view what they are going to do at Christmas. The conversations with advertisers have been very positive and quite constructive. They are not saying no, they have just been cautious because of the outlook [around inflation and interest rates].”However, McCall cited ground for optimism in the coming months, describing Unilever’s announcement that prices are going to down as “brilliant news”.“[It] means they have absorbed the impact and that inflation is not going to get worse. That’s fantastic news that will help consumers and therefore boost business confidence,” McCall said. “We have had no problems sponsoring any of our shows, and every single one of the shows has a sponsor and revenue. So there is a lot of positivity, but it is impossible to have visibility on Q4, so we just can’t tell you.”ITV’s share of commercial viewing also broadly held steady at 33.6% (down 0.1 percentage points year on year), while UK subscribers for ITVX now stand at 1.4 million.The company also believes it is in a “good position” to take advantage of opportunities from the US writers strike. Julian Bellamy, MD of ITV Studios, pointed to its catalogue of 90,000 hours of content.“What we’ve been doing is talking to people to see whether we can help fill their schedules,” McCall added. “We’re not going to be charging a premium, by the way, we think we should be offering our customers what they [want] from our catalogue if they require it.”Today was the first earnings call since ITV aborted a move to acquire All3Studios, the production studio behind hit shows Gogglebox (Channel 4) and Fleabag (BBC).McCall described the acquisition as something ITV “had to look at” because it was “bang on strategy”. She wouldn’t be drawn exactly on why the deal fell through but did insist ITV Studios’ acquisition strategy should not be “scale for scale’s sake”.She said: “Our strategy says we want to expand and it’s not scale for scale’s sake, it would have to be the right business. So we will remain remain interested in anything that comes up in the market because that is the space we are in… Scale doesn’t mean the bigger you are, the better you are, it means you need to have the right talent within that and you need to have the right programmes in that and, most importantly, the right development pipeline, so you can see the potential for the future.”
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