ITV Sinks as Ad Exodus Forces Broadcaster to Scrap Guidance
ITV Plc canceled its 2019 dividend and abandoned its revenue outlook for 2020 after advertisers dropped work with Britain’s biggest commercial free-to-air broadcaster and restrictions on movement forced it to pause work on new shows.
The widening impact of coronavirus means market forecasts for March and April have worsened further since its latest market update on March 16, ITV said. Deferrals of advertising, previously limited to travel companies, have spread to all categories. The shares fell as much as 21%, and were 6% lower at 8:18 a.m. in London
”We are operating in unprecedented and uncertain times, requiring us to take difficult decisions, plan carefully and act with speed,” Chief Executive Officer Carolyn McCall said in a statement. “Given the current uncertainty we are withdrawing our market guidance for 2020.”
Advertising spending makes up about half of ITV’s revenues. The broadcaster is also suffering in its production arm, ITV Studios, where it’s had to postpone hit programs like “Coronation Street” to comply with social distancing rules.
“It’s only a week since they put out numbers for April, and with March there’s only a week left, but they’re still unable to give a guidance,” said Conor O’Shea, an analyst at Kepler Cheuvreux, by phone. “It shows that cancellations are coming in thick and fast.”
In a move to conserve cash, ITV has decided not to pay the planned final dividend of 5.4 pence for 2019 or an 8 pence full-year dividend for 2020. It is also reducing its programming budget by 100 million pounds ($116 million) and capital expenditure by 30 million pounds.
ITV said it has good access to liquidity to help it through the downturn, including a 630 million-pound revolving credit facility expiring in December 2023, of which 100 million is currently drawn. It said it has no bond repayments until September 2022.
©2020 Bloomberg L.P.