ITV Slides as Travel Firms Delay TV Advertising Due to Virus
ITV Sees Ad Sales Drop as Virus Cuts Travel Marketing
(Bloomberg) --
ITV Plc shares fell 9.7% after the U.K. broadcaster forecast a slump in April ad sales as travel companies delay marketing campaigns because of the coronavirus.
Early indications suggest advertising revenue will be down 10% in April, ITV said in a statement. The company said it was too hard “to assess the further implications of the coronavirus but we continue to monitor the situation closely.”
The spending cuts interrupt an improvement in ITV’s ad sales as companies become more confident about Britain’s break from the European Union. ITV sees ad sales growing 2% in the first quarter.
The virus is now a concern for large sporting events like the Euro 2020 soccer tournament, which ITV expects to be a big driver of ad income. In a call with reporters, Chief Executive Officer Carolyn McCall said the virus wasn’t having a noticeable impact on advertising by other sectors beside travel.
ITV shares were down 9.3% as of 8:50 a.m. in London. The intraday share price drop was the biggest since 2016.
Read More on Market Response to ITV’s Ad Outlook
“The market will be alarmed at the April ad decline,’ said Alex DeGroote, founder of DeGroote Consulting and an independent media analyst. “Is this the beginning of a savage downturn? This in turn must imply material profit downgrades.”
DeGroote said ITV’s dividend could be under threat if the virus impacts expectations for 2020 earnings.
The company’s performance had been improving under McCall as she works to rely less on ads and generate more revenue from ITV’s production arm and a new U.K. subscription streaming service, BritBox.
ITV said BritBox has performed in line with plans since its November launch. McCall said most users were converting to paying subscriptions after a free trial.
ITV’s total ad revenue fell 1.5% last year as the Brexit turmoil caused companies to trim marketing budgets. That was an improvement on earlier guidance.
Total external revenue in 2019 rose 3% to 3.31 billion pounds, slightly above the average analyst estimate of 3.25 billion pounds in a survey of 11 estimates compiled by Bloomberg.
To contact the reporter on this story: Joe Mayes in London at jmayes9@bloomberg.net
To contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net, Jennifer Ryan
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