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(Sharecast News) - Broadcaster ITV reported a drop in first-quarter total advertising revenue (TAR) on Thursday and said the outlook was "challenging" given the current macroeconomic backdrop.
In the three months to the end of March, TAR fell 10%. However, this was "as expected and better than the wider TV advertising market", it said.
ITV said TAR is forecast to decline 12% in the second quarter, with expected falls of 12% in April, 10% in May and 14% in June compared to the same period a year earlier.
Chief executive Carolyn McCall said the company was looking forward to the third quarter, however, with Love Island and the Rugby World Cup set to draw large broadcast and streaming audiences.
Total external revenue was down 7% during the quarter to £776m, while ITV Studios revenue was flat at £457m.
Revenue in ITV Media & Entertainment (M&E) declined 9% to £495m, with TAR as expected, down 10% and again, better than the wider advertising market.
The broadcaster said that ITVX, its free, ad-funded streaming service, continued to perform strongly, with total digital revenues up 29% and total streaming hours up 49% in Q1.
At 1150 BST, the shares were down 4% at 74.02p.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "ITV's first quarter held few surprises. Double digit declines in advertising revenue were expected, but these are due to get worse in the new quarter. That reflects the very real challenges that come with relying on above-the-line spending during times of economic stagnation. ITV is throwing a lot at its digital transformation, and digital advertising revenue is proving more resilient. However, this isn't enough to stem losses elsewhere, showing how deeply rooted ITV still is in traditional broadcasting.
"Studios revenue is on track to deliver mid-single digit revenue growth. This area of the business is sitting on a well of future demand thanks to the huge swell in appetite for content from other providers. There are tricky elements to deal with in content creation though. It's a very tough business in which to inflate margins, and is a large reason ITV's operating profit expectations have been dialled back."
