UK’s ITV facing “sharp” ad sales slump, report claims

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UK broadcaster ITV is facing declining TV ad sales in Q4 despite the upcoming FIFA World Cup in Qatar, according to analysts at Berenberg.

The news comes as the Love Island broadcaster reportedly looks to spin off production and distribution arm ITV Studios to support an already ailing share price.

Cutting its 2022 advertising estimates for the broadcaster following conversations with media buyers, Berenberg said that demand seems to be dropping “quite sharply” for the final quarter.

The analysts said that while the UK’s leading commercial broadcaster may benefit from its coverage of the World Cup, this will fail to offset an underlying decline in demand. The bank forecasts a 1.8% decline in full-year advertising, a worse performance than the 0.3% drop previously forecast.

In terms of ITV’s overall top line, Berenberg said that the drop in ad sales would be partly offset by a favourable US exchange rate boosting the broadcaster’s US Studios unit, but noted that the ad impact would be “many times higher” than the margin on studio revenue.

Berenberg said that its media buyer contacts appear to “know relatively little” about the content likely to appear on upgraded on-demand platform ITVX. It noted that ITV’s service will arrive in “a crowded market” with Channel 4 ahead in terms of AVOD and new ad-supported tiers from Netflix and Disney+ likely to intensify competition.

Following Berenberg’s comments, ITV confirmed its new streamer would launch 8 December with shows premiering at launch including A Spy Among Friends, Tell Me Everything, The Confessions of Frannie Langton and Plebs: Soldiers of Rome.

More than 250 “stellar films” such as the Back To The Future trilogy will also be included, along with 200 series and live-streamed ITV channels. FAST channels will also be accessible.

The bleak ad assessment comes despite TV broadcasters across Europe showing some resilience in the race of a rapidly weakening economy and declining viewership.

Berenberg said that the “relative strength of TV ad spend is not sustainable”, and noted that audience demographics told their own story. Germany’s ProSiebenSat.1 and international broadcaster RTL have both been hit by deteriorating circumstances.