(Sharecast News) - UK broadcaster ITV reported a 41% fall in annual profits as weak ad revenues offset a record performance from its studios unit.
Pre-tax profit for the year to December 31 came in at £396m from £672m a year earlier.
Group revenues fell by 2% to £4.3bn, with TV advertising decreasing by15%. However, there was a brighter picture at digital, where sales rose 19% and the studios arm reported a 4% increase, to £2.2bn.
The commercial broadcaster has set its sights on making more from its studios business, with the recent 'Mr Bates' drama about the scandalous treatment of post office operators, viewed by 4 million people when televised in January, and 10 million more via the channel's on-demand service, ITVX and its ITVX streaming business.
ITV last week sold its 50% share of the UK streaming service BritBox International to its joint venture partner BBC Studios for a net £235m in cash which it plans to return to shareholders.
Cost cuts of £50m, on top of an existing targets to save £150m between 2019 and 2026 were also unveiled and will come from technology and operational efficiencies.
"ITV claims it's seen the peak in investment in Streaming, leaving it well-placed to grow profits from here. But given the intense competition in the space, that remains to be seen," said Derren Nathan, head of equity research at Hargreaves Lansdown.
"The expectation that total advertising revenue will rebound 3% in the first quarter of 2024 suggests things are going in the right direction but there's still material execution risk here. That's somewhat reflected in the valuation, with the shares being pummelled to the tune of around 30% over the last 12 months."
"The high single-digit dividend yield shouldn't be overlooked. And the recent sale of the 50% stake in Britbox International enables greater focus on the core business and paves the way for a £235m buyback that begins today."
Reporting by Frank Prenesti for Sharecast.com
ITV (ITV)