ITV has withdrawn its market guidance for the year and implemented cost-cutting measures as a result of the impact that Covid-19 is having on the commercial broadcaster, chief executive Carolyn McCall has announced.
In a trading update, the broadcaster has announced the aim to reduce its programme budget by £100m including savings made from production around the now postponed Euro 2020 tournament. Discretionary spending will also be cut by £20m alongside already announced savings of £10m and another £30m has also been identified, the statement claimed.
McCall outlined the issues the broadcaster faced in terms of its production house, ITV Studio’s ability to create new series as the whole of the UK is asked to socially distance, while advertising revenue is also seeing a decline across a wide range of sectors.
"We are operating in unprecedented and uncertain times, requiring us to take difficult decisions, plan carefully and act with speed. Our absolute priority is to protect our people, while trying to ensure that we deliver the news and programmes our viewers value and love to watch, and to keep them informed. We are actively taking measures to reduce costs and manage our cash flow so that we are best positioned to continue to deliver our strategy of building a digitally-led media and entertainment company over the medium term,” said McCall.
The statement also outlined an increase in demand for ITV’s library of programming as the world is told to stay at home and isolate
“Demand for quality content remains strong and therefore we continue to work on our development slate and we are ready to resume production as soon as we are able. As one of the largest international producers of unscripted content which has a shorter lead time, we will be able to ramp up production quickly.”
However, advertising forecasts for March and April have ‘deteriorated’.
“We have seen further deferrals in advertising which are now coming from across the advertiser categories rather than just in travel and we are staying in close contact and working constructively with our client and agency partners. The situation remains dynamic and therefore we are not in a position today to give guidance for March or April. We will update again at our Q1 Trading Update in May. Over a full year, each 1% decline in total advertising revenue reduces revenue and profit by c.£17 million, before any mitigation [sic]”
On 16 March, ITV revealed that it has £150m of unrestricted cash, a £630m Revolving Credit Facility expiring in December 2023, of which £100m is currently drawn, and a £300m undrawn bilateral facility expiring in June 2021. In addition, it does not have any bond repayments until September 2022.
“We will continue to execute our strategy over the medium term and will carefully monitor our ongoing investment in the ITV Hub, Planet V and BritBox in 2020, as we continue to build a digital media and entertainment company,” McCall also stated.
This announcement comes as there is understood to be uncertainly within the media buying sector as to where to divert budgets too during this ever-moving world crisis.