ITV sees return to ad growth by end 2020, but warns over second lockdown hit

Broadcaster ITV has said advertising revenues will return to growth in the final quarter of 2020, but warned over a hit from the second lockdown.

The group behind shows including I’m A Celebrity … Get Me Out Of Here! said advertising spend dropped 7% in the third quarter, following a 43% plunge in the previous three months.

It forecast total ad revenues to rise slightly in the fourth quarter, with a 6% bounce-back expected in November, as it hailed the success of programmes such as the Duke of Cambridge’s documentary A Planet For Us All and crime drama Des for driving “mass audiences”.

Its production arm has also resumed the majority of its productions since the disruption caused by the spring lockdown, with the latest series being broadcast from Sunday.

But it warned that the second national coronavirus lockdown in England and ongoing UK restrictions elsewhere will continue to knock revenues and make it “challenging” to bring production back to full capacity.

ITV chief executive Carolyn McCall said: “Advertising trends are improving, with the fourth quarter forecast to be slightly up year on year and 85% of our productions in the UK and internationally that were paused as a result of Covid-19 are back in production or have been delivered.

“However, Covid restrictions and further national lockdowns have added production costs and are making it challenging to bring ITV Studios productions back to full capacity.”

The group added that the “delay to productions, further national lockdowns, social distancing and other Covid-19 measures will continue to impact revenue and margin” in the fourth quarter and into 2021.

The second lockdown impact will come as a setback after a recovery gradually picked up speed, with ad spend tumbling 23% in July before recovering 3% in August, then easing back 2% in September.

Spend fell 1% in October before the expected return to growth in November.

ITV saw profit before tax crash 93% to £15 million in the first half of the financial year, on revenue of £1.45 billion, as it was knocked by the pandemic.

This came despite the number of people watching broadcast television increasing for the first time since 2011 as Britons were stuck at home amid the pandemic.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The pandemic has put ITV between a rock and a hard place.

“Demand for new content is soaring and more viewers are switching back on their TVs to watch programmes live, bucking the trend of a drift towards on-demand.

“But its production arm, ITV Studios, can’t make shows fast enough to satisfy their need, with lockdown mark 2 delaying filming even further, adding to costs.”