Market Watch

ITV Ad Revenues to Be Flat in H1 (UK TV Advertising Round-Up)


Display Driver IC Forecast

ITV television advertising revenues grew 12 per cent (Screen Digest was expecting 11.5 per cent) in the first quarter of 2011. Revenues from the 'Broadcast and Online' category were up 12 per cent at £436m, and External Studio revenues reached £64m, a seven per cent increase. Total ITVplc revenues grew 11 per cent to £500m in Q1 2011 (2010: £450m).

ITV management also gave insights on ad sales in Q2: April sales were up six per cent, May was down nine per cent and June is expected to be down 'between -15 and -20 per cent'. ITV management thus expects net advertising revenues (NAR) in the first half to be nearly flat year-on-year, suggesting that Q2 alone is going to be down seven per cent.

Analysis
Q1 revenues were slightly better than expected. April was still rather good but Q2 revenues were always going to look tough due to a strong inflationary spike in May and June 2010 driven by World Cup demand and benefiting ITV1 more than any other channel. There were no major sports event this year to counter-balance these difficult comparatives, but the royal wedding was a modest driver in April. The broadcast was live on BBC, ITV1 and Channel Four. BBC achieved the best ratings. Commercial broadcasters were not allowed by Ofcom to insert ad breaks during the daytime broadcast (State occasion), but were given extra minutage allowance during the rest of the day/week to compensate. Although there were not that many campaigns directly referring to the event and the associated celebrations (Co-op and Freeview were among them, as well as M&S), the event may have contributed to the April growth, compared to an already strong month last year.

We believe the overall UK television market was up 11.1 per cent in Q1 and down 3.7 per cent in Q2. H1 as a whole was up 3.1 per cent.

ITV management said it was cautious for the rest of the year due to economic uncertainty and continued unfavorable comparison in Q3. GDP growth resumes in Q1 (+0.5 per cent), but the UK economy still trails its European neighbours (France was up one per cent, Germany 1.5 per cent in the same quarter).

Screen Digest is revising Q3 forecasts and is now expecting full-year ITVplc's broadcast TV NAR to grow by 0.6 per cent (previously 1.8 per cent), underperforming the UK TV market (forecast revised from +3.1 to +2.1 per cent).

On the bright side, ITV's audience performance was robust in the first four months of the year, which explains that the group slightly outperformed the UK ad market (up 11 per cent according to Screen Digest). Broadcast continues to do well: ITV1 adult share of commercial impact (SOCI) was flat over the first four months at 27.1 per cent, and ITV Family adult SOCI was up 0.7 point at 40.3 per cent. Online performance improves from a low basis: long form video views were up 67 per cent to 45m and total video views rose by 45 per cent to around 72m. This is however in line with the British market and ITV remains well behind BBC and Channel Four in terms of online consumption. ITV management said it will make the ITV Player available on a wider range of mobile devices and tablets, starting with Android smartphones within the next few weeks and the iPhone in Q3, 2011.

ITV has also confirmed that it has come to an agreement in its legal dispute with STV through a £18m payment by STV to ITV to settle the ongoing court claims. ITV has also agreed a new three-year deal to broadcast live UEFA Champions League football until 2015.

Separately, BSkyB reported 9-months all-media NAR of £348m million (2010: £247 million) up 41 per cent year-on-year higher, mostly due to the consolidation of the sale of airtime on Living TV (effective from calendar Q3, 2010). This translates into 9M TV NAR of £333m and £108m for calendar Q1, television only, UK and Ireland (up 44 per cent).

Channel Four reported full-year 2010 revenues. NAR grew 12.4 per cent to £795m in line with our estimate (NAR growth 11.8 per cent for core channel and 13.6 per cent for digital channels), i.e. slightly below market growth (14 per cent).

Find Out More > IHS Screen Digest Advertising Intelligence