Back in September the ITV share price hit its lowest level in two years but has since undergone a solid recovery of over 50%, helped by anticipation of a pickup in advertising revenue due to the World Cup in Qatar, and the continued success of ITV Studios which has continued to go from strength to strength.
There had been vague chatter earlier this year that its ITV Studios business might be in the crosshairs of possible bid speculation however that doesn’t appear to have come to anything at the moment.
Putting to one side the short-sightedness of selling the most lucrative part of the business at a time when advertising revenues are likely to be challenging, both parts of the business have performed better than expected over the last 12 months.
Given its position as a seller of content to other streaming platforms like Apple TV+, Amazon Prime, and Netflix its dominance can only grow when it comes to its share of ITV revenue.
In November ITV reported total revenue year to date was up by 6%, and this has improved in today’s full-year numbers to a rise of 7% to £4.34bn, while profits came in at £672m, a decline of 13%, but which were still better than forecasts.
ITV Studios has continued to come into its own and is getting closer to contributing to 50% of total revenue, rising 19% to £2.1bn. Media and Entertainment, or the advertising part of the business saw a decline of 1% in total advertising revenue (TAR) to £2.25bn. This was at the lower end of expectations.
Advertising has proved to be challenging over the last 12 months, however, the launch of ITVX does appear to have helped mitigate some of the worst effects of that slowdown. Total digital revenues rose by 18% to £411m, while total viewing hours also increased, as did UK subscribers.
Since its launch, ITVX has attracted 1.5m new registrations, pushing total subscriptions to 37m, while total streaming hours grew by 69%, compared to the same period a year ago when users were on other ITV streaming platforms like ITVHub.
Adjusted pre-tax profits fell by 13% to £672m, while warning that the outlook for Q1 was likely to remain challenging and that TAR in Q1 was expected to see a decline of 11%. This warning over the outlook appears to be weighing on the share price in early trading.
ITV went on to say that they remained committed to increasing ITV Studios’ adjusted EBITDA margin guidance to between 13% to 15%. They are also looking to make further cost savings of £15m during 2023.
ITV proposed a final dividend of 3.3p, taking the total dividend to 5p per share.
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