ITV announced plans to reduce costs by £30 million across its media and entertainment division after advertising revenue declined by 8% in the third quarter. This move comes as the company prepares for its £1.6 billion sale to Sky. The cuts, £25 million in content spending and £5 million in discretionary expenses, respond to a broader weakening in advertiser spending. Despite the challenges, the acquisition timeline remains unchanged.
Advertising revenue has weakened further over the first nine months of the year, falling by 1%, slightly below earlier expectations. Economic uncertainty, competition from global streaming services, and new restrictions on ads for unhealthy foods, now in effect between 5:30 a.m. and 9:00 p.m., have contributed to the decline. The company anticipates additional drops of 5-10% in the fourth quarter and 2-3% for the full year 2026.
Digital revenue, however, has shown resilience, increasing by 6% to £461 million, up from £432 million in the prior year. Streaming hours on ITVX rose by 29%, reaching 2.153 billion, fueled by major events like the World Cup finals and popular shows such as Love Island. In contrast, traditional linear advertising has struggled, with total media and entertainment revenue down by 1% for the period.
Carolyn McCall, ITV’s CEO, described the cost reductions as necessary adjustments to match current advertiser demand while supporting growth in ITV Studios and digital platforms. The company’s overall content budget for 2026 has been lowered to approximately £1.2 billion, reflecting earlier downward revisions. ITV Studios, responsible for productions like I’m a Celebrity, reported revenue of £1.3 billion, though external income declined by 4% due to delays in production partnerships.
The proposed sale of ITV’s free-to-air channels and streaming service to Sky continues to face regulatory examination. The UK’s Culture Secretary has directed two industry regulators to assess the deal, though ITV maintains the process is advancing as planned. While the company’s share of commercial viewing has inched up to 32.7%, the ongoing advertising downturn poses financial challenges ahead of the takeover’s completion.
Despite these headwinds, ITV’s digital expansion, highlighted by ITVX’s streaming growth, offers a counterbalance. The company’s ability to sustain profitability in digital while handling advertiser pressures will be critical as it approaches the Sky acquisition.
Leave a Reply