ITV plc (ITV) Ordinary 10p

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TV reported a 1% decline in first-quarter revenue to £875mn. Slight growth in its Studios business was more than offset by a 3% decline in Media & Entertainment (M&E).

Within M&E, ITVX continued to grow its monthly active user base, with total streaming hours up 12%. Studios benefitted from strong demand and the timing of content deliveries to global streaming platforms.

Net debt rose by £24mn over the quarter to £455mn.

Over 2025, ITV remains on track to deliver £30mn of non-content cost savings, and Studios revenue is expected to grow ahead of the global content market. M&E remains on track to deliver at least £750mn of digital revenues by 2026.

The shares fell 2.1% in early trading.

Our view

ITV's revenue fell slightly in the first quarter, as a small uptick in its Studio business was more than offset by declines in Media & Entertainment (M&E). Comparable figures are set to get tougher for M&E in the near term, which is likely to weigh on investor sentiment.

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. And due to the Men’s Euros 2024 boosting performance last year, declines are expected to be in the double-digit range next quarter.

One bright spot is digital advertising. ITVX continued its stellar run, becoming the UK’s fastest-growing streaming platform over the last two years, 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 2026, digital advertising revenues are expected to exceed £750mn. 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’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.

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 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. The sale of these programmes isn’t currently directly impacted by US tariffs.

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 6.3% 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 slightly 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.

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 Refinitiv. 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.

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