ITV broadcasts confident outlook as interim profits tumble

ITV upped its interim dividend as a show of confidence in the underlying business as first-half profits fell 8%, with a decline in advertising sales joined by fall in production profits due to higher investment and timing of shows.

Total external revenue in the six months to 30 June shrank 3% year-on-year to £1.46bn, with net advertising revenues for the ITV 'family' of channels falling 8% partly offset by 6% growth in non-NAR, with 55% of total group revenues coming from sources other than traditional spot advertising.

Adjusted earnings before interest, tax, depreciation and amortisation fell 8% to £403m and adjusted earnings per share dropped 9% at 7.7p, with the dividend lifted 5% to 2.52p.

Despite the decline in ad sales, which ITV put down to ongoing economic and political uncertainty, the broadcast business grew its share of viewing, with Britain gripped by shows ranging from Broadchurch to Love Island.

The Online, Pay & Interactive arm enjoyed good growth to limit the decline of the total broadcast and online segment to 6% to £1bn and adjusted EBITA down 8% at £293m, even though schedule costs were cut 3% and other costs by 11%, with more to come in the second half.

ITV Studios, the production business, revenues grew 7% to £697m including currency benefit, with adjusted EBITA down 9% at £110m as further investment was made in the US scripted business and the fact that the prior year includes the full benefit of the four year license deal for The Voice of China.

With chief executive Adam Crozier recently stepping down after a successful seven year tenure, but new boss Carolyn McCall not transferring from EasyJet until January, chairman Peter Bazalgette has taken on an executive role in the interim.

Guidance for the full year was unchanged, with Studios having already secured 85% of expected full year revenues, over £100m more than this time last year, and on track to deliver good organic revenue growth but with adjusted EBITA broadly flat.

While ITV Family NAR in the third quarter is expected to be down around 4%, over the full year Bazalgette expects the company to outperform the TV advertising market, with further good growth in Online, Pay & Interactive anticipated.

"ITV continues to deliver the mass audiences demanded by advertisers as well as delivering the key target demographics, ITV is the only channel to deliver a commercial audience over five million and Love Island demonstrates that young viewers engage in great TV content," he said.

He said Studios has a "very strong" pipeline of new and returning drama and formats and that the US business was "building momentum".