ITV Studios profits soar by 22%, as ITV earnings decline 7% with advertising slump expected

Physical S2

ITV has seen its profits slide by 12% over the past year but ITV Studios (ITVS) remains a bright spark, as CEO Carolyn McCall again ruled out selling the production and distribution arm.

The Nolly broadcaster revealed revenues had risen by 7% to £4.3bn ($5.3bn) in 2022 but EBITDA profits were down to £717m, which ITV attributed to the cost of launching its revamped streaming offering, ITVX.

Media & Entertainment profits plunged 22%, with revenues down 1% at £2.2bn. However, while advertising remained static at £1.9bn, digital revenue rose by 18% to £411m.

Content spending is expected to hit £1.3bn and praise was heaped on ITVX, which saw 1.5 million new registered users. Streamed hours are up almost 70% year-on-year when compared with ITV Hub and “deeper personalisation” is being planned.

Julian Bellamy

McCall pointed to “significant progress” despite the “macro and geopolitical uncertainty” but admitted that ad revenues would fall by 11% in Q1 of 2023.

Studios growth

It was international division ITVS that carried the company’s results, with the Julian Bellamy-led unit reporting a revenue rise of 19% to £2.1bn while adjusted EBITDA soared by 22% to £259m.

The division revealed a new strategy at the end of 2021 to expand its business, largely revolving around three key pillars: expanding scripted; growing formats; and expanding ITVS’s business with streamers.

The scripted push in particular is paying off, with shows such as Physical for Apple TV+ helping ITVS report a 58% rise in high-end scripted hours. ITVS also said it had sold 19 formats in three or more countries, while returns from streamers rose from 13% to 22%.

Bellamy told TBI this week that ITVS wants to achieve “parity” between unscripted and scripted revenues, while its streaming success has prompted a new target to be set, with ITVS aiming for 30%, rather than 25%, of its revenues to be sourced from streamer commissions.

ITVS’s overhaul of its US division has also paid dividends, with revenue up by more than a quarter to £467m. The company pointed to Let The Right One In on Showtime as a key show, along with the upocoming seacond season of Tomorrow Studios’ Physical on Apple TV+.

The ITV CEO also reiterated durig this morning’s earnings call that ITVS “is not for sale,” reiterating comments made in December.

Of the overall results, McCall added: “As a result of ITV’s deliberate strategic actions and strong execution, ITV has a scaled and expanding global production business, a rapidly growing targeted digital advertising business, a resilient linear TV advertising business and a unique vertically integrated producer broadcaster and streamer model.

“This means that ITV is now a demonstrably more balanced business which is ideally placed to take advantage of the growing demand for quality content from viewers, broadcasters and streamers and take a larger share of the digital advertising market.”