ITV Expects Fourth-Quarter Ad-Revenue Drop as Brexit Weighsby
U.K. broadcaster sees ad revenue down 7 percent in period
Full year seen down 3 percent, with ITV outperforming market
ITV Plc, the U.K. broadcaster known for the soap opera Coronation Street, forecast fourth-quarter revenue from advertising will drop 7 percent as companies have become more careful over political and economic uncertainty since the country’s June vote to leave the European Union.
Full-year ad revenue is expected to be down 3 percent, though ITV expects to outperform the market this year and next, the London-based company said in a statement Thursday. ITV provided the forecast as it reported nine-month financial results, including a 4 percent drop in ad revenue in the third quarter.
“Over recent weeks, I think you can see the political and economic uncertainty has increased, particularly with the debate over a hard or soft Brexit,” ITV Chief Executive Officer Adam Crozier said on a conference call. Advertisers are becoming more cautious, but the rate of decline in advertising is expected to ease, he said. “There’s no real change in behavior, genuinely no canceling of any campaigns.”
Analysts have warned ITV would suffer from any decline in TV ad spending over uncertainty about the U.K. economy and have been focused on the broadcaster’s outlook for the fourth quarter. While ITV has been expanding its digital and production businesses, ads still accounted for about half the company’s revenue last year.
The shares reversed an earlier drop to gain 1.3 percent as of 8:43 a.m. in London. The stock, which has 13 buy, 11 hold and one sell recommendation from analysts, is down 40 percent this year through Wednesday.
The forecast for a 7 percent decline in fourth-quarter ad revenue is better than the 8 percent to 10 percent drop expected by some in the market, Liberum Capital Ltd. analysts led by Ian Whittaker wrote in a note. The decline may have been buffered by ITV’s acquisition of Northern Ireland-based broadcaster UTV Ltd. earlier this year.
In July, Crozier said it was too early to assess the impact of the Brexit vote on ad spending. ITV has been eliminating jobs to help counter uncertainty following the referendum, targeting 25 million pounds ($31 million) in cost savings for 2017.
In the first nine months of the year, external revenue, excluding sales to customers within the business, rose 5 percent to to 2.16 billion pounds. Net advertising revenue fell 1 percent to 1.2 billion pounds, in line with ITV’s July forecast. Revenue outside advertising increased 15 percent to 1.25 billion pounds.