ITV suffers steepest advertising fall ever due to Covid-19 lockdown

ITV has been hit by the steepest decline in advertising in its 65-year history, a 43% fall in the second quarter, as the impact of the coronavirus pandemic looks set to push the broadcaster out of the FTSE 100 at next month’s reshuffle.

The broadcaster, which has scrapped paying an interim dividend to fortify its balance sheet, reported a 50% fall in adjusted profits to £165m in the first half. The company said advertising revenues fell 21% in the first six months, a drop of £178m to £671m, including a 43% decline in the second quarter.

Carolyn McCall, the chief executive of ITV, said that while the worst is over the ongoing uncertainty in the market meant the company would not issue performance guidance for the remainder of this year.

“This has been one of the most challenging times in the history of ITV,” she said. “While our two main sources of revenue – production and advertising – were down significantly in the first half of the year and the outlook remains uncertain, today we are seeing an upward trajectory with productions restarting and advertisers returning.”

The broadcaster said that advertising revenue significantly improved in July, down 23%, with analysts estimating August and September to drop below a 20% decline.

ITV Studios, which makes shows from Coronation Street to Love Island, has now restarted 70% of the 230 shows put on hold as the pandemic shut down film and TV production across the UK. ITV Studios reported a 17% fall in revenues to £630m in the first half.

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The company’s share price has fallen considerably during the crisis, down 60% so far this year to 59p, pushing its market value down to £2.3bn. ITV’s shares were down 4% in early trading on Thursday.

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“A 60% decline in the share price means that bid speculation is bound to resurface, if indeed it ever went away,” said Richard Hunter, head of markets at Interactive Investor. “In any event, at current levels ITV is destined for relegation from the FTSE 100 at the reshuffle next month.”

McCall addressed the issue of bid speculation, arguing that the company is significantly undervalued.

“We have been speculated as an acquisition target for about 12 years, maybe 15, I don’t think there has been a year or a month that passes by that that doesn’t happen so we don’t comment on that,” she said. “We are doing well on our own and the share price is not reflective of the performance of the company or indeed the value of the company. We have very strong foundations … we have the ability I think to build the business and create value going forward.”



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