Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ITV PLC (ITVPF, Financial) reported a 40% increase in group adjusted EBITA, indicating strong financial performance.
- ITV Studios is forecasted to deliver record profits for the full year, despite challenges such as strikes and slower FTA commissions.
- Digital revenues grew by 12%, driven by a 17% increase in digital advertising revenue, showcasing the success of ITVX.
- The company is on track to deliver GBP40 million in cost savings for 2024, demonstrating effective cost management.
- ITV PLC (ITVPF) declared an interim dividend of 1.7p, reflecting a commitment to shareholder returns.
Negative Points
- Total external revenue was down by 2%, with ITV Studios affected by short-term factors.
- UK revenues declined due to fewer ITVX premieres and the absence of popular shows like The Voice Kids.
- International revenues decreased due to lower demand from free-to-air broadcasters in Europe.
- Subscriber numbers for ITVX fell by 36% in H1, attributed to strategic changes and migration issues.
- The company expects Q3 total ad revenue to be flat, partly due to the impact of the Olympics being broadcast elsewhere.
Q & A Highlights
Q: How does the performance of ITVX in the first half relate to sports events, and should we expect a drop-off in viewing and monetization in the second half without major events?
A: Carolyn McCall, CEO, explained that while live sports like the Euros contribute to spikes in viewing and ad revenue, strong dramas and reality shows also drive significant ITVX engagement. Chris Kennedy, CFO, added that the focus should be on overall trends rather than quarterly fluctuations, as ITVX continues to perform well even without major sports events.
Q: Can you elaborate on the strong growth in catalog sales at ITV Studios and whether it indicates broadcasters are becoming more cautious?
A: Carolyn McCall noted that catalog sales have offset challenges in the ad revenue market, highlighting the diversification within ITV Studios. Despite a challenging backdrop, ITV Studios is expected to deliver record profits, with positive signs from European broadcasters as ad markets improve.
Q: Regarding the sale of a US studio for $60 million, is there a systematic plan to monetize non-core investments?
A: Chris Kennedy stated that ITV does not have a large portfolio of non-core assets, and the sales of BritBox and Blumhouse were opportunistic, capitalizing on favorable valuations.
Q: How does the Q3 TAR outlook account for the impact of the Olympics, and what are the underlying drivers?
A: Carolyn McCall acknowledged that the Olympics, airing on the BBC, will affect viewing figures but noted that ITV benefits from Olympic-themed advertising campaigns. Chris Kennedy explained that the Studios contract structure changes are strategic decisions to minimize risk and optimize economic outcomes.
Q: Can you provide more details on the improvements planned for ITVX in the second half of the year?
A: Chris Kennedy mentioned ongoing investments in platform features like the recommendation engine and distribution enhancements. Marketing efforts will continue to drive viewing, and the focus remains on delivering high-quality content and improving user experience.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
