ITV shares tumble as strikes in Hollywood continue to damage the studio’s arm
- ITV was the second worst performer on the FTSE 250 Index, behind Wood Group
- Turnover at ITV Studios fell by around £300m in the nine months to September
ITV shares on Thursday morning after the broadcaster revealed that turnover at its production division had plummeted by a fifth in the first nine months of the year.
Turnover at ITV Studios, maker of hit show Mr Bates vs The Post Office, fell by almost £300m to £1.2bn in the nine months to September 30 as the unit continued to suffer the impact of last year’s strikes years in Hollywood.
Despite solid growth in digital advertising revenue, ITV’s total revenue over the period still fell 8 percent to £2.7 billion.
Production: Toby Jones as Alan Bates in the ITV Studios series Mr Bates vs The Post Office
ITV shares were down 7.8 per cent (or 5.65p) at 66.7p at 11am, making them the second-worst performer on the FTSE 250 Index behind oilfield services company John Wood Group.
The company has been hit hard by last year’s strikes in the US film and television industries, when actors and screenwriters walked out in a dispute over concerns over pay and artificial intelligence.
Production on many shows and films was halted for more than six months before agreements with major entertainment unions — SAG-AFTRA and the Writers’ Guild of America — were finalized.
As a result, ITV expects around £80m of turnover to be deferred from this year to 2025.
The London-based company has also been hit by weaker short-term demand from European free-to-air broadcasters.
But while ITV expects its production division’s revenue to decline by a mid-single digit percentage in 2024, the company expects to be able to deliver adjusted profits in the range of 13 to 15 percent.
Carolyn McCall, CEO, said the segment has “had an excellent start” to the fourth quarter, “which will ensure it achieves record profits in 2024.”
ITV plans to release “an unusually large number” of productions between October and December, including crime dramas Grace and Shetland, and Rob Brydon-hosted adventure series Destination
And while it forecasts ad sales for the period to be around 6 to 7 per cent lower due to last year’s Rugby World Cup and uncertainty ahead of the Budget, the company said full-year advertising revenue will be around 2 will be .5 percent higher.
McCall additionally announced that ITV would make a further £20 million in cost savings this year, split roughly equally between content and non-content costs.
“Combined with our strategic results and revenue outlook, this continues to give us confidence that we will deliver an increase in group profit this year,” she said.
Richard Hunter, head of markets at Interactive Investor, said: ‘In investment terms, ITV remains a tough watch, weighed down by the endlessly deep pockets of some of its competitors in the streaming space, and also still feeling the after-effects of the previous writers’ and actors’ strike in Hollywood.’
He added: ‘Investors remain skittish about the prospects, as evidenced by an initial share price reaction that reflects broader and more obvious concerns around overall advertising revenues.’
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