ITV (LON:ITV) reported first-half revenue growth across both its Studios and Media & Entertainment divisions, while reaffirming its full-year outlook and outlining plans to begin returning cash to shareholders ahead of the proposed sale of its M&E business to Sky.
The company said the transaction, announced earlier this month, is expected to enable a £950 million net cash return to shareholders upon completion, excluding contingent consideration. ITV declared an interim dividend of £0.017 per share, unchanged from a year earlier, and announced a £100 million share buyback as an early portion of the anticipated cash return.
Studios revenue rises as profit reflects second-half weighting
ITV Studios generated £912 million in revenue during the first half, up 2% from the prior year and 3% on an organic basis. EBITDA declined 9% to £97 million, producing an 11% margin.
Chris Kennedy, ITV’s COO and CFO, said revenue and margins in the Studios unit are weighted toward the second half, particularly the fourth quarter. The company cited a pipeline of scripted and unscripted productions scheduled for delivery later in the year.
ITV maintained guidance for good full-year Studios revenue growth, with margins expected at the lower end of its 13% to 15% target range.
Management highlighted the division’s production, ownership and distribution model, as well as its intellectual-property library and Zoo 55 digital distribution capabilities. The company said a successful creative property can generate revenue across multiple years, markets and channels.
Programs scheduled for the second half include “The Gentleman in the Woods” for Netflix, “Guilty Creatures” for Apple TV+, a double season of “Hell’s Kitchen” for Fox in the U.S., and returning BBC series “Line of Duty” and “Vigil.” ITV also cited “I’m a Celebrity” among its upcoming programming.
In response to an analyst question, management said streaming platforms represented around 30% of ITV Studios revenue, compared with 5% five years ago. It also pointed to further potential in unscripted programming and digital operations. Zoo 55 has a target to double revenue to £120 million by 2027, according to management.
World Cup supports advertising and ITVX engagement
Media & Entertainment total advertising revenue rose 3% year over year to £850 million. Digital revenue increased 13% to £307 million, while ITVX viewing climbed 27% in the first half. June was ITVX’s first month with more than 20 million monthly active users.
Both digital and linear advertising benefited from the FIFA Men’s World Cup, which ITV said delivered mass audiences. The England-Norway quarterfinal recorded the year’s largest commercial audience to date, with a peak of 18.4 million viewers, according to the company. ITV said it attracted about 200 advertisers to the tournament, including 70 new to football advertising.
ITV also cited programming performance outside football. “Gone” was described as the largest new commercial drama of the year, while “The 1% Club” remained television’s largest quiz show. The summer edition of “Love Island” was the year’s largest commercial program among viewers aged 16 to 34, excluding football, ITV said.
Management said ITVX’s revenue growth did not match the rate of viewing growth because the company manages its advertising load based on available demand and inventory. Kennedy said ITV sells addressable advertising at a fixed base price, with advertisers able to pay more for premium targeting. Management added that ITVX inventory is sold through its wholly owned Planet V platform, helping the company maintain control over pricing and yield.
Planet V has attracted more than 1,700 new advertisers since launch, according to ITV. The company also said its YouTube partnership had expanded its reach among younger viewers, with more than 1,300 brands now partnered through its in-house sales team, up from around 800 at year-end. ITV recently launched Comcast Universal Ads in the U.K. to simplify access to premium television advertising for small and medium-sized businesses.
Costs, cash flow and advertising outlook
M&E EBITDA increased 37% to £48 million. ITV said total content costs fell 2%, despite the World Cup, while non-content costs rose due to higher marketing spending for a new brand campaign and content launches. Excluding marketing, non-content costs increased 3%, with £4 million in permanent savings delivered so far this year.
The company remains on track to achieve £20 million of cost savings in 2026, which would bring cumulative savings since 2019 to £273 million. It said it had not announced additional savings measures in response to current advertising-market conditions.
ITV ended the period with net debt of £652 million and leverage of one times. Profit-to-cash conversion was 63% on a rolling 12-month basis, below the company’s average because of working-capital build-up tied to the second-half weighting of Studios revenue and M&E commissioning cycles. Management expects this effect to partially reverse over the full year.
For the third quarter, ITV expects total advertising revenue to decline around 5%, leaving advertising revenue broadly flat for the first nine months of the year. Management cited economic uncertainty, changes in the U.K. political environment, and the effects of the Iran war on inflation and cost-of-living conditions. It also said some advertising spending may have shifted into the June and July World Cup period.
ITV said it was too early to provide a fourth-quarter advertising outlook, though Kennedy noted that the period is typically driven by Christmas advertising. The £100 million share buyback is expected to take between nine and 12 months to complete, subject to market liquidity.
About ITV (LON:ITV)
ITV is a producer, streamer and broadcaster, consisting of ITV Studios and Media & Entertainment (M&E).
ITV Studios is a scaled global creator, owner and distributor of high-quality TV content, producing some of the most successful shows in the world. It operates in 13 countries, across 60+ labels and is diversified by genre, geography and customer in the key creative markets around the world.
Media & Entertainment is the largest commercial streamer and broadcaster. Through M&E, we make brilliant British-focused content available on ITVX – our free, advertiser-funded streaming service – alongside our free-to-air linear TV channels.
