For chief executive Carolyn McCall, ITV’s (ITV) nine-month performance to September may have been "very much as we expected”, but news of weaker advertising revenues was met with disappointment by the market.
While double-digit revenue growth continued for online advertising, ITV warned of “some softening” in net advertising revenues during the fourth quarter, amidst economic uncertainty. Total advertising is expected to fall 3 per cent over the quarter, coming out “broadly flat” for the full year. The shares fell by as much as 5 per cent on the morning of the announcement.
External revenues rose 6 per cent to £2.3bn during the first nine months of the year, with total advertising up 2 per cent – buoyed by 43 per cent momentum in online revenues. Meanwhile, ITV Studios’ revenues rose by a considerable 10 per cent, or 7 per cent organically. For the full year, management anticipates “good growth” here in terms of sales, and profits in line with its expectations.
That said, ITV Studios’ 12-month organic growth is expected to come in at around 3 per cent, partly because the programme Snowpiercer will now be delivered in 2019 instead of the fourth quarter of 2018, as previously planned.
Broker Shore Capital has reduced its adjusted earnings forecast for 2018 by 4 per cent to 15.1p a share, although analysts there say they “would not be surprised if Brexit-related political and economic uncertainty impacts a broad range of consumer-facing stocks in the fourth quarter”.
