ITV releases positive Q3 trading update after difficult year

The UK's biggest independent television company ITV plc has released a trading update for Q3 and the 9 months to 30 September, showing strong revenue growth in the quarter and a big boost in online viewing figures. The update will be welcomed by investors, as the business continues to rebalance following challenges during the year.

ITV saw good total revenue growth of 5% to £2.16bn (with a currency benefit), Non-NAR (Non-Advertising-Revenue) revenue is up a significant 15% to £1.25bn, ITV Studios revenue is up 18% to £923m, and Broadcast & Online revenue up just 1% at £1.5bn. Studios and Non-NAR revenues helped drive overall growth for the group.

Viewing figures online are up 49%, viewing figures on television are up 3%, and the group has a healthy pipeline of new and returning programmes.

ITV's ad revenue was down 4% in Q3, and in recent weeks political and economic uncertainty has driven more cautious behaviour by ITV's advertisers, resulting in Q4 ad revenue's expected to be down 7%. Full year, this equates to a fall of 3%, but it is important to point out that ITV is still outperforming the wider TV advertising market for 2016.  

"Our strong on screen performance and continued ability to deliver mass audiences gives us the confidence that based upon the deals we have done we will also outperform our estimate of the TV ad market in 2017."

Against a now, even more, uncertain economic backdrop, ITV says it expects 2016 earnings to be in line with 2015, driven by growth in its Studios and Online businesses in the UK and internationally.

CEO Adam Crozier said management had delivered on its strategy for the 9 months, and as a result, ITV was now a much more balanced and resilient business, with ITV Studios delivering double-digit revenue growth to £923m. He confirmed ITV had secured 162 new commissions and 139 recommissions which should help the firm return to good organic revenue growth in 2017:

"We have a strong content pipeline of new and returning dramas including Victoria, Poldark, Cold Feet, Endeavour, Vera, Thunderbirds, Prime Suspect 1973, Harlots and The Good Witch all selling well internationally. We have sold around 60 formats globally this year including This Time Next Year, The Voice, Five Gold Rings, Hell's Kitchen and Love Island."

Mr. Crozier said the business had continued to tighten controls on costs, ensuring that it was operating as efficiently as possible and maximizing investment in programming:

"We are on track to deliver £25m of overhead cost savings in 2017 as previously announced and, due to the absence of any major sporting event, the NPB will be £25m lower in 2017 whilst maintaining the strength and depth of our schedule." 

ITV shares open up slightly this morning but have fallen 20% since the start of September. The firm currently trades on a PER of 13.92.