Shares in ITV fell almost 4% on Thursday morning, after Britain’s biggest free-to-air commercial broadcaster suffered the steepest advertising decline in its 65-year history as the coronavirus pandemic wiped out advertising revenues and shut down the production of shows.
The FTSE 100-listed company said ad revenue for the second quarter fell 43%, driving a 17% decline in total group revenue for the six months to the end of June to £1.5 billion ($1.98 billion). Adjusted earnings before interest, tax, and amortization halved to £165 million. Advertising revenue fell 21% to £671 million in the first half of the year.
Shares in ITV
which have fallen 60% so far this year, fell 3.58% to 58.72p at 8:50 a.m. in London.
Chief Executive Carolyn McCall said it had been “one of the most challenging times” in the history of ITV. “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,” McCall said in a statement on Thursday.
ITV Studios, which airs shows including “Good Morning Britain,” paused the majority of its productions globally in mid-March as a result of the restrictions on working practices, resulting in a 17% drop in revenue to £630 million.
In May, ITV said the popular dating show “Love Island” won’t broadcast a summer series this year because of the coronavirus pandemic. The broadcaster said that of the 230 productions that were impacted or paused by the lockdown, around 70% have been delivered or are back in production as of today.
The broadcaster scrapped its interim dividend “in light of continued economic uncertainty,” and said that it wasn’t possible to provide financial guidance for the third quarter or the remainder of the year.
Read:Pandemic ‘wrecks’ FTSE 100 dividend outlook for 2020, as U.K. payouts fall to lowest levels since 2014
“Quite apart from substantial competition from rivals with money to burn such as Netflix
and Amazon Prime
ITV’s reliance on traditional advertising revenue is something of a thorn in its side,” said Richard Hunter, head of markets at Interactive Investor.
Read:Fox posts lower quarterly profit as ad sales fall
“At this point, the company isn’t able to provide guidance further out and the lack of a previously punchy dividend is a disappointment to income-seeking investors, even though it was largely expected,” he added.
Brits spent an average 6 hours 25 minutes watching news and entertainment in April when the U.K. was in full lockdown — an hour and a half more than the average figure for 2019, according to a report published on Wednesday by regulator Ofcom.
An estimated 12 million adults signed up to a new streaming service in the first weeks of lockdown, with around 3 million subscribing for the first time, Ofcom said.
Emilie Stevens, equity analyst at Hargreaves Lansdown, said early signs are positive, with advertising gradually recovering, although still markedly down on usual levels. “Demand for fresh content has never been higher and ITV said itself demand for content from streaming platforms was particularly strong. If the economic and advertising recovery turns out to be short lived, the Studios business which now accounts for a significant chunk of the group’s income should keep money coming in.”