ITV shares have plunged to an all-time low after the broadcaster reported a sharp decline in advertising revenue, raising concerns about its financial stability. Despite growth in its streaming platform ITVX, the company is struggling to offset losses in traditional TV advertising.
Advertising Woes Drag ITV Down
The commercial broadcaster saw its shares drop by nearly 20% following a disappointing trading update. Total advertising revenue fell by 7% in the first quarter, with April expected to be down by a worrying 12%. This marks the steepest decline since the pandemic, excluding external shocks like the 2008 financial crisis.
Streaming Growth Fails to Offset Losses
While ITVX recorded a 19% increase in digital advertising and streaming hours grew by 27%, this wasn't enough to counterbalance the slump in linear TV ads. The platform added 1.6 million new registered users, bringing its total to 12.5 million, but analysts question whether digital growth can compensate for traditional revenue streams.
McCall Under Pressure
CEO Carolyn McCall faces mounting pressure as the share price continues its downward spiral. Having taken the helm in 2018, McCall has overseen a 60% decline in ITV's market value. Her strategy of focusing on ITV Studios production arm and digital transformation is being tested as traditional advertising revenues dwindle.
Market Reaction
Analysts have expressed concern about ITV's outlook, with some suggesting the company may need to consider more radical restructuring. The challenging advertising market, combined with intense competition from global streaming giants, has left investors nervous about ITV's ability to maintain its dividend and fund content investments.
As the media landscape continues to evolve rapidly, all eyes will be on McCall and her team to demonstrate they can steer ITV through these turbulent times and deliver on their digital-first strategy.
