ITV plc (ITV) Ordinary 10p

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ITV’s revenue rose 1% to £3.5bn in 2026. Studios revenue grew 5% reflecting strong demand from global streaming platforms. This more than offset weaker advertising revenue in its Media & Entertainment business where the prior year benefitted from the 2024 men’s Euros.

Underlying cash profit (EBITA) fell 3% to £531mn, driven by lower advertising revenues.

Free cash flow fell from £325mn to £187mn, reflecting lower levels of cash generation. Net debt rose from £431mn to £566mn.

In 2026, ITV expects to deliver “good” revenue growth, ahead of the broader market. Full-year underlying cash profit margins are expected to be at the lower end of its 13-15% target range due to an unfavourable revenue mix.

A final dividend of 3.3p per share was announced, taking the full-year total to 5.0p, in line with the prior year.

The shares rose 3.6% in early trading.

Our view

ITV had a strong end to the year, helped by better-than-expected advertising revenue. The outlook for 2026 was also better than markets had expected, helped by positive commentary on the men’s football World Cup, which saw the shares move higher on the day.

Talks with Sky regarding the potential sale of its Media & Entertainment (M&E) business remain ongoing. This would include ITV’s free-to-air TV channels, as well as ITX, which has been a big growth driver for the group in recent times. While nothing is confirmed yet, the £1.6bn figure being discussed looks like a good price for ITV.

M&E performance has been weak of late due to a tough comparable period. But it still makes up around half of the group’s revenue, so the sale raises questions about the long-term options for the rest of the group. It could leave the remaining Studios business open to bids from other buyers.

The Studios business is arguably ITV’s crown jewel. It makes and distributes shows in the UK and abroad. Some of these are sold back to ITV's M&E business, but other blockbusters like Line of Duty are made for others. The sale of these programmes isn’t currently directly impacted by US tariffs.

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. But this should get a helpful boost from the men’s football World Cup this year, as more matches are set to be shown on the group’s channel, creating prime-time advertising slots.

Another bright spot is digital advertising. ITVX continued its stellar run, with streaming hours continuing to grow at double-digit rates. With more eyeballs on ITV’s shows, digital advertising revenues are flowing in, giving management confidence that by the end of 2026, digital advertising revenues will exceed £750mn (2024: £482mn).

The balance sheet remains in good shape, providing a layer of operational flexibility. There’s also a generous 6.4% dividend yield on offer. But please remember, no shareholder return is ever guaranteed.

Given ITV's relatively modest valuation, it’s no surprise to see interest from potential buyers. Progress on the deal is likely to be the main driver of sentiment in the near term, and failure to agree terms would likely weigh on the valuation, perhaps presenting an opportunity for investors. But given the structural decline in broadcasting advertising, other parts of the business need to work harder, making it difficult to accurately plot the group’s growth trajectory.

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.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.

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