ITV 2020 profit dives but BritBox sign-ups surge

A company sign is displayed outside an ITV studio in London, Britain July 27, 2016. REUTERS/Neil Hall

ITV’s results were a mixed bag oweing to cancellation of some of its flagship shows. Photo: REUTERS/Neil Hall

ITV (ITV.L) said its profit and revenue for 2020 were down as its productions were disrupted due to the pandemic and advertising took a major hit.

In a release on Tuesday morning, it said that due to the lack of video-on-demand drivers, such as Love Island, which got cancelled, fewer soaps and no major sporting events, online viewing was down 5%.

Shares slumped roughly 8% on Tuesday morning following the news before rebounding to trade around 1.5% lower.

BritBox, an online digital video subscription service, operating as a joint venture of the BBC and ITV, was a bright spot, which increased its subscriptions by 50% year-on-year. ITV also said the majority of its programmes are already back in production.

It reported a 39% decline in pre-tax profits to £325m ($451m) and total group revenue was £2.8bn, down 16%. Total broadcast revenues were down 8%, with total advertising down 11%.

“While total revenues and profits were down our financial performance was ahead of expectations driven by a strong end to Q4 and our firm control over costs,” said CEO Carolyn McCall.

ITV shares ticked lower Tuesday morning. Chart: Yahoo Finance

ITV shares ticked lower Tuesday morning. Chart: Yahoo Finance

“We are encouraged by the roadmap out of lockdown. We are seeing more positive trends in the advertising market in March and April and the majority of our programmes are now back in production,” she said, adding that “BritBox UK is ahead of plan hitting half a million subscriptions in January 2021… we now have over 2.6m subscriptions globally across all our SVOD [subscription video on demand] services.”

In 2021 ITV plans to continue to roll out new original content on BritBox UK including The Beast Must Die, The Secrets of the Krays and Spitting Image series 2. BritBox will also launch on Amazon Prime Video Channels this spring.

“However, there remains uncertainty in all markets around the world with the potential risk of lockdowns, which if they materialise will affect revenues,” McCall warned.

It said due to the pandemic it still expects some continued disruption and delay with increased costs due to safety protocols.

READ MORE: COVID pandemic breeds new generation of young investors

The company said it will make further cost-cutting while investing to accelerate the delivery of its strategy and digital transformation. It has restructured its broadcast business to create the Media and Entertainment Division to better respond to changing viewing habits.

In 2020, ITV delivered £116m of cost savings, ahead of the guidance of £60m.

It aims to deliver around £100m of annualised permanent overhead cost savings by 2022, from 2019, compared to a previous guidance of £55 to £60m. Around £30m of these savings will be delivered in 2021.

The company said it has had a “very positive response” to its new platform Planet V, which allows advertisers and agencies control over the purchasing of their campaigns across ITV’s premium video-on-demand service, the ITV Hub.

SnowPiercer for TNT and Netflix has been recommissioned for a third series and Love Island is now available in 20 countries.

Looking forward, the company’s key strategic focus is to “internationalise our formats, grow our scripted business and increase our commissions for OTT platforms,” it said.

ITV expects total advertising revenue to be down around 6% in Q1, with strong growth in VOD up around 14%, assuming there is no change in the current planned restrictions.

It confirmed there would be no annual dividend for the second year in a row.

“It’s tough out there for companies that rely on traditional advertising revenue. Not only have digital insurgents made this space a lot harder, in times of economic crisis, marketing budgets are the first to get cut,” noted Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

“That made 2020 a very tough year for ITV, coming straight off the back of what was already a difficult time. Its digital offering is still too small to really move the dial, and failed to pick up the slack… COVID-19 has thrown a serious spanner in the works here, with global set shut-downs and high fixed costs resulting in a disappointing profit performance,” she added.

Earlier this week ITV broadcast and interview of Prince Harry and wife Meghan Markle with Oprah Winfrey, which has attracted a lot of attention internationally. The interview covered a range of topics — including Markle’s suicidal thoughts and “concerns” within the Royal family over the colour of their son Archie’s skin.

Watch: ITV to air Oprah Winfrey’s interview with the Sussexes