ITV scraps dividend as ad revenue falls

ITV scrapped its dividend and withdrew market guidance as the coronavirus crisis ate into advertising revenues and forced the broadcaster to put productions on hold.

The FTSE 100 company said the closure of shops, entertainment facilities and other businesses was having an increasing impact on advertising income across sectors. ITV said each 1% decline in ad revenue reduced revenue and profit by about £17m.

ITV, whose programmes include Love Island, said it would not pay the proposed 5.4p a share final dividend for 2019 and would scrap its plan to pay an annual dividend of 8p a share in 2020. Conditions are too uncertain to keep financial guidance for 2020 in place, it added.

The company said it would cut spending on programmes by at least £100m and reduce discretionary spending by £20m. Capital spending will be cut by £30m.

The spending reductions include up to £50m of budget reductions from the cancellation of 2020 European football championship. ITV said taken together the measures would keep more than £300m of cash in the business.

"Forecasts for March and April have deteriorated since we last updated the market," ITV said. "We have seen further deferrals in advertising which are now coming from across the advertiser categories rather than just in travel and we are staying in close contact and working constructively with our client and agency partners."

ITV said restrictions on working practices made it difficult to film productions. It said revenue reductions would be partly offset by increased demand for its archive of content from other broadcasters and platforms.

"We have had to pause a significant number of productions in the UK and internationally, which we are doing in a systematic manner to ensure that we are well placed to resume production as soon as we are able to and to minimise the costs of disruption," ITV said.

The company said it had good access to liquidity with a £630m of revolving credit expiring in December 2023, of which £100m is drawn, and a £300m undrawn bilateral facility expiring in June 202. It has no bond repayments until September 2022.

Carolyn McCall, ITV's chief executive, said: "We are operating in unprecedented and uncertain times, requiring us to take difficult decisions, plan carefully and act with speed … We are actively taking measures to reduce costs and manage our cash flow so that we are best positioned to continue to deliver our strategy of building a digitally led media and entertainment company over the medium term."