British TV giant ITV expects to get 60% of its total revenue from production and digital businesses this year, up from just 45% from non-advertising sources in 2016, CEO Carolyn McCall said at an industry conference in London on Tuesday, adding that her team is “fairly confident” that these growth businesses will account for about two-thirds of the company’s total revenue by 2026.
During the keynote interview at the Royal Television Society’s (RTS) London 2024 Conference, she also spoke about ITV’s digital transformation, which includes its ad-focused ITVX streaming service, how the streaming business is integrating with its linear networks, the growth of its production division ITV Studios, which continues to grow through acquisitions, and why her team invests in shows such as Mr Bates vs the Post Office.
McCall said ITVX is seeing positive usage and engagement trends, noting that “watch frequency is increasing” and “time spent is increasing.”
She also agreed with Channel 4 CEO Alex Mahon that digital audiences are more valuable than linear audiences, highlighting the higher cost per thousand impressions because “highly personalised targeting costs more”, but the ITV chief also stressed that “but there’s no substitute for the amount of money you can get from one big event bringing together 15, 20, 22 million viewers at the same time”.
But things got even more heated when McCall was questioned about the Labour government’s plans to go ahead with a plan devised by former Conservative government Boris Johnson to ban junk food advertising on TV before 9pm to tackle child obesity. “95% of adults watch ITV and 95% of kids watch YouTube,” McCall said, questioning the effectiveness of the plan. “Kids aged 16 to 25 don’t watch much TV… We’ve done a ton of research to conclude that this won’t have an effect on obesity, but it’s a political issue and we have to mitigate it in every way we can.”
What will be the financial impact on ITV? “I haven’t put a specific figure on it,” the CEO said, “but it will be in the millions and millions and we’ll need to look at what we can do to mitigate that. We’ll know that at the end of next year.” The ITV boss concluded that “we will find a way to get through it.”
ITV announced a new strategic restructuring and efficiency program in March to “reposition its cost base, drive profitability and support its studio and streaming growth drivers.” The company expects the program to deliver incremental total savings of at least £50 million ($64 million) per year by the end of 2024.
The company recently forecast that ITV Studios will post “record profits in 2024 driven by increased high-margin catalogue sales and ongoing efforts to drive efficiencies,” but that full-year revenue is expected to be slightly lower due to the impact of the 2023 Hollywood writers’ and actors’ strike, which it expects to delay revenue by around £80 million ($103 million) from 2024 to 2025, and that “weak demand from free-to-air broadcasters in Europe in the short term.”
