TEMPUS ITV pins its hopes on latest box of tricks6 Oct 2020 10:38
https://www.thetimes.co.uk/edition/business/itv-pins-its-hopes-on-latest-box-of-tricks-zfvz6sgcm
ITV’s shareholders could be forgiven for thinking that they have seen this storyline before (Simon Duke writes). In 2009, when Britain last fell into recession, the broadcaster suffered a sharp drop in advertising income and was duly ejected from the FTSE 100. In March this year, marketing chiefs slashed spending and, by August, ITV again found itself demoted from Britain’s top index.
On the surface, the UK’s largest free-to-air broadcaster looks as vulnerable as it was a decade ago, despite costly attempts to be more resilient. Under Adam Crozier, its former chief executive, ITV bought independent production houses to strengthen its studios division, which makes programmes for both its own channels and rivals. In theory, this business should be much less prone to upheavals in the economy — yet it has proved anything but.
In the first half of the year, ITV Studios’ revenues fell by 17 per cent to £630 million — a performance only marginally more robust than its advertising business. On-air and online adverts generated £671 million in the first half, down 21 per cent year-on-year.
However, shareholders would be wrong to conclude that the strategy of bulking up in production has failed. The Covid-19 economic downturn cannot be compared with the slump that followed the financial crisis. Social distancing restrictions meant that ITV had to pull down the shutters on many of its productions. With no content to hand to its customers, ITV Studios inevitably suffered; it is paid only on delivery.
The outlook for the studios business is brightening. After several months of shutdown, Britain’s television production industry is cranking back to life. ITV Studios has resumed shooting on more than 80 per cent of the shows that it had
to pause during the height of the pandemic. With hopes building for a tentative recovery in the advertising market, Dame Carolyn McCall, the chief executive, can steer ITV back into the FTSE 100 relatively quickly, provided, of course, that there’s no second lockdown.
Since succeeding Mr Crozier at the start of last year, Dame Carolyn has increased investment in ITV Hub, its online catchup service, which has had a surge in traffic recently. The former Easyjet boss wants to squeeze more from hit shows like Love Island through branded merchandising and other commercial tie-ins.
Her biggest move, however, has been Britbox, a subscription streaming offering launched with the BBC in November to compete with Netflix and Amazon’s Prime Video. ITV and the BBC are making original programmes for Britbox, including the revival of Spitting Image, the satirical puppet show, but until Britbox builds a bank of exclusive content, its mainstay will be shows from the broadcasters’ archives.
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