Boris Johnson’s coronavirus ordeal and his subsequent war on obesity has sent shudders through Britain’s beleaguered TV industry. The prime minister’s grand plan to slim down the nation includes outlawing adverts for junk food before the 9pm watershed. There will also be a consultation on the adverts being banned online as well.
Despite the government’s recent impact assessment suggesting the ban would cut average child consumption by just 1.7 calories a day, Johnson is adamant adverts are to blame. The 9pm watershed is not expected until 2022, but it could not have come at a worse time for media brands. ITV would lose about £100m if the pre-watershed ban was implemented, according to industry estimates. Channel 4 could lose £40m. Any weakening of Britain’s broadcasters would suit Netflix and Amazon Prime, which make money from subscriptions instead.
Dame Carolyn McCall, ITV chief executive, said advertising had almost “halved overnight” once the pandemic hit. In April, it saw a 42% year-on-year decline compared with ITV’s previous estimates of a 10% fall. All of its productions were stopped. Hit shows Love Island and Britain’s Got Talent were postponed or cancelled. ITV sought to mitigate the loss by cutting pay for McCall and other senior executives by 20%, while about 800 staff were furloughed. Its summer schedule has been peppered with repeats. It has also suspended its dividend and cut capital expenditure.
The fall in advertising is frustrating for ITV, as viewing figures rose sharply with families stuck at home during lockdown. Its aggregate share of viewing rose by 2% year on year to 4.4 billion hours. Shares have more than halved since March, closing at 56.7p, valuing the company at £2.3bn. ITV has a forward price/earnings ratio of 6.7. It has no dividend yield.
Results on Thursday will provide a glimpse into the progress of BritBox, the streaming platform ITV owns in partnership with the BBC. Analysts at Shore Capital said they were cautious over its appeal to customers, given the competition. McCall, 58, recently referred to the battle against the streaming platforms as a “fight for every eyeball”, while at the same time Netflix added a further 10 million subscribers in its second quarter.
For ITV, results this week are unlikely to be pretty. Bloomberg suggests revenue for the first half of the year of £1.2bn, compared with £1.5bn in the same period last year. It will take some early signs that advertising — and production — is returning to restore confidence. Avoid.
