ITV’s full-year revenue fell 3% to £4.1bn, as growth in total advertising revenue (TAR) was offset by the expected decline in Studios.
Underlying cash profit (EBITA) rose 11% to £542mn, with cost cuts helping both the Studios and Media & Entertainment divisions contribute positively.
Free cash flow fell 10% to £325mn as the ramp up of production activity following the US industrial action impacted cash generation. Net debt improved from £553mn to £431mn at year-end, helped by the proceeds from the sale of its stake in BritBox International.
ITV Studios revenue is expected to grow “ahead of the market” in 2025, with performance weighted to the second half. The group expects to deliver a further £30mn of cost cuts in the year.
A final dividend of 3.3p per share takes the full-year total to 5.0p, in line with last year.
The shares rose 4.2% in early trading
Our view
ITV struggled to grow the top line in 2024, with the reduced content slate resulting from the 2023 writers’ and actors’ strike weighing on performance. But cost cuts continued at pace, ultimately helping profits to keep moving in the right direction.
ITV relies on companies paying to advertise on its traditional television channels. Given the structural decline of broadcast advertising, moving ITV's top line in the right direction is very difficult.
One bright spot is digital advertising. ITVX continued its stellar run, becoming the UK’s fastest-growing streaming platform over the last two years as streaming hours and monthly active users were both up at double-digit rates. With more eyeballs on ITV’s shows, advertising revenues are flowing in, giving management confidence that by the end of 2025, the group will have recouped its investment in the platform much earlier than expected.
We’re pleased with the continued momentum, but it’s still relatively early days. The digital offerings don't yet have enough scale to carry the weight of weakness in the free-to-air side of things.
The roughly 50% increase in digital revenues targeted by 2026 looks achievable. The group’s access to a huge slate of produced global content, as well as homegrown favourites like Love Island, should help drive growth in the viewer base, which is key to meeting this target.
We must point out the sheer scale of competition in this sector – think Netflix or Amazon Prime Video. The competition has substantially deeper pockets to throw at growing market share. It’s an expensive arena to play in and a ramp-up in production has weighed on cash flows in 2024.
The Studios business makes and distributes shows in the UK and abroad. Some of these are sold back to ITV's Media & Entertainment business, but other blockbusters like Line of Duty are made for others.
Helped by the sale of its stake in BritBox International, net debt moved lower last year, adding a layer of flexibility to operations. There’s also a generous 7.3% dividend yield on offer. But please remember, no shareholder return is ever guaranteed, especially when the outlook remains rocky for the group.
ITV has come a long way. But concerns remain over digital competition and the economy. Having the right idea is entirely different to being able to move fast enough to offset the structural decline in broadcast advertising. That’s reflected in a valuation below the long-term average, and there could still be further challenges ahead.
Environmental, social and governance (ESG) risk
The media industry’s ESG risk is relatively low. Product governance is the key risk driver, alongside business ethics, labour relations and data privacy & security.
According to Sustainalytics, ITV’s management of ESG risk is strong.
Its environmental policy is adequate and executive remuneration is explicitly linked to sustainability performance targets. However, its overall ESG reporting falls short of best practice.
ITV key facts
All ratios are sourced from Refinitiv, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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