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Stock Watch

ITV share price dips following FY update

ITV share price: the ITV headquarters in London

The ITV share price is lower this morning following the release of disappointing full-year results, athough the final quarter showed signs of improvement. 

ITV share price drops after revenue falls

Adjusted EBITDA dropped by 21% to £573m which was better than analysts’ forecasts. Total external revenue fell by 16% to £2.78bn. The pandemic caused massive disruption to productions hence why ITV studios revenue fell by 25%. Total advertising revenue fell by 11%, but in the fourth quarter it increased by 3%, a potential sign that the group is near the end of pandemic-related pain. ITV cautioned about the uncertain macroeconomic outlook, but it has seen an increase in advertising trends. Total advertising revenue is predicted to increase by 8% this month and April should see growth of 60-75% as the bulk of programmes are back in production.    

The cost-cutting scheme is going well as £116m has been saved, comfortably ahead of the £60m forecast. £21m of the cost reductions are permanent, beating the £10m guidance. Looking ahead to the new financial year, the broadcaster intends to deliver roughly £100m in permanent cost savings, far higher than the £55-£60m forecast.  

Advertising revenue drop hurts ITV share price        

Since 2015, the ITV share price has been in a downtrend as the company was feeling the pinch on two fronts. Firstly, tech giants like Google and Facebook have been poaching advertising revenue, and secondly streaming services like Netflix have been powering ahead in the content arena. In this era, content is king and ITV have had some success with original TV shows like Downton Abbey and Love Island, which have captured the public's attention and boosted viewership numbers, which makes the TV station more attractive for advertising.

When the pandemic began, many firms cut their advertising budgets on account of the overall uncertainty. In the first half, total external revenue and total broadcast revenue fell by 17% but things improved slightly in the third quarter as the metrics registered declines of 16% and 13% respectively.

Royal boost for ITV

Netflix enjoyed great success with the TV show The Crown. Similarly, the ITV share price was given a lift last week when it was announced that it secured the much talked about Oprah Winfrey interview with Prince Harry and Meghan Markle – which is available on ITV hub. The Duke and Duchess of Sussex have been in the news a lot recently so that interview should be a feather in the broadcaster’s cap.          

The ITV share price has been in an uptrend since September and it recently hit its highest level in over one year. While it holds above the 50-day moving average at 109.9p, the broader bullish trend should continue and it might target the 140p zone. A move below 109.9p should bring the 98p area into play.  

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