Love Island gives ITV a tonic in tough ad market

LONDON: “Love Island”, ITV’s hit show watched by 6 million fans every night on TVs, tablets and smartphones, helped the British broadcaster beat advertising revenue expectations and rise to the top of the FTSE leaderboard on Wednesday.

The show, which ITV said will gain a winter edition next year, returned to screens in the final month of the company’s first half and limited the decline in ad revenue to 5% for the period, beating its prediction of a 6% decline.

ITV Chief Executive Carolyn McCall said the political environment in Britain, where the issue of Brexit still needs to be resolved, was continuing to dampen ad demand.

“The economic uncertainty, and the fact it had been prolonged, has definitely affected our clients,” she told reporters.

“In Q2, we’ve seen a tick-up as a result of having a big show like ‘Love Island’; whenever you have a big programme it attracts people to spend money around that show, and we’ve seen that both on linear and on VOD (video on demand).”

McCall said ITV was performing well across its schedules, with the four highest rating dramas on British television in the period, including “Manhunt, on its main channel.

“Love Island” was notable, however, for the success of its sponsorships and tie-ups beyond the traditional 30 second spot.

“We’ve made an incremental 8 million pounds ($10 million)from ‘Love Island’ this year compared to last year, and that is not on the spot advertising side, that’s on the other partnership deals that we are doing, including launching a make-up brand with (beauty company) Fenty,” she said.

RESULTS “SHOULD TURN HEADS”

ITV reported total external revenue down 7% to 1.476 billion pounds ($1.84 billion) and adjusted core earnings down 13% to 327 million pounds for the six months to end-June, with the latter just beating market expectations.

It said total advertising revenue would be in a range of -1% to +1% in the third quarter, also ahead of analyst forecasts.

Shares in the group, which had fallen 34% in the last 12 months, were trading up 6% at 113 pence at 0846 GMT.

Analysts at Citi said the results “should turn heads for the better”, pointing to a 2.3% decline in second-quarter advertising revenue versus guidance of about -5%, a beat of about 10% on adjusted core earnings and additional cost savings flagged by the company.

ITV has built up its studios production business in recent years to reduce reliance on advertising demand in Britain.

Total ITV Studios revenue fell 6% in the period, which it put down to the timing of programme deliveries, but it said it expected a solid second half, with shows such as “I’m a Celebrity… Get Me Out of Here!” returning. Full-year revenue for the unit would grow by at least 5%, it said.

ITV kept its half-year dividend unchanged at 2.6 pence a share. ($1 = 0.8033 pounds)