ITV’S advertising sales have been savaged as firms hold off on marketing campaigns due to the uncertainty created by the long run-up to Rachel Reeves’ second Budget, The Mail on Sunday understands.
The fall in television advertising, still a key revenue stream for the commercial broadcaster, comes hard on the heels of the decision by ITV’s cornerstone investor, billionaire John Malone’s Liberty Global, to halve its 10 per cent stake to 5 per cent in the past week.
It also comes at a tricky time for ITV, whose shares have drifted lower over the past decade as streaming services such as Netflix have eaten into its revenues. The company is due to report its third-quarter earnings on November 6, and they are unlikely to make for easy viewing.
Chief executive Carolyn McCall has made strenuous efforts to reduce the company’s reliance on advertising cash, with its studio operations – behind hits such as Love Island, hosted by Maya Jama – and its own streaming service ITV X now responsible for half the company’s sales. But the group is still highly dependent on commercial advertising to boost profits.
Change of direction: Studio operations, behind hits such as Love Island, hosted by Maya Jama (pictured), and its streaming service ITV X are now responsible for half the company’s sales
And despite ITV’s ability to reach large audiences through its broadcast network, Britain’s most famous brands and retailers, who normally would be building up their advertising spend ahead of the vital holiday season, are said to have been holding back.
Supermarkets, some of Britain’s biggest employers and spenders, have been reluctant to commit to big new campaigns after being bruised by the Chancellor’s increase in employers’ National Insurance Contributions last year.
Advertisers are also living in fear of income-crushing tax increases in the November 26 Budget, which could blow a further hole in consumer spending less than a month before Christmas.
Recent data from the marketing industry shows that only 22 per cent of companies expected to increase their spending in the third quarter after a soft start to the year.
Firms are holding back on more costly media spending with advertising by leading brands and out-of-home commercials, such as poster campaigns, suffering.
Even if high-spending commercial advertisers do come back into the market after the Budget, it will be too late to save the third quarter and will only provide a limited boost beyond that.
Analysts estimate that ITV Studios, with a standalone value of up to £2.5 billion, accounts for almost all of ITV’s stock market valuation of £2.7 billion.
The group is counting upon next summer’s World Cup in the US, Canada and Mexico, to revive its advertising fortunes.
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