ITV's strong first half may prove difficult to duplicate

It's inevitable that many companies cut their marketing spend during economic downturns – and this is, in turn, bad news for firms that rely on advertising revenue. Though ITV (ITV) recorded a strong performance in the first half of the year, it remains highly exposed to macroeconomic risk. Put simply, it’s not a great time to be a broadcaster or a streaming service. And ITV is both.

In the first six months of 2022, revenue from the firm’s streaming platforms grew, and now accounts for nearly one-fifth of its overall takings. Total advertising revenue (TAR) was up 5 per cent year on year, and within this segment digital advertising revenue was up 20 per cent. But management will be happy enough to even match performance from 2021.

“Despite the tough comparators of last summer, when the Euros and a rebounding economy drove record advertising revenues, TAR is expected to be broadly flat in the nine months to the end of September,” said the firm’s chief executive, Carolyn McCall, in a statement.

Compared to the first three quarters of 2019, ITV’s advertising revenues are expected to be up 8 per cent. This is down to the fact that it has simply been able to get more eyes on screens than ever before. The company’s strengthened streaming offering drove its best-ever digital viewing numbers in the first half, with 814mn streams on its ITV Hub platform, up 8 per cent year-on-year.

Looking ahead, ITV plans on launching its new ad-funded streaming service, ITVX, in the fourth quarter of this year. The company promises that the platform will “deliver valuable addressable audiences at scale” to advertisers. While this may be the case, there’s no guarantee that these advertisers will have licence to spend freely in a potential recession. Hold.

Last IC view: Hold, 83p, 03 Mar 2022