ITV PLC (LSE:ITV) shares are down 50% since early 2020, with uncertainty on the advertising outlook weighing in recent months as giants such as WPP and Publis warnings are fresh on the mind ahead of a third-quarter trading statement this coming Wednesday.
While executives at the FTSE 100-listed broadcaster may be licking their lips at the massive viewership numbers expected in 2024 when it airs the UEFA Euros, that is a long time away.
"The focus in the results call will be mostly on advertising trends as well as the outlook for the rest of the year," analysts at Barclays said, adding that there are also likely to be questions about the impact of the US writers’ strike, the abandoned acquisition of Gogglebox maker All3Media and Ofcom's September decision to stick with stricter advertising rules for public sector broadcasters.
Speaking to the City after half-year results, management said it was “too early to give a forecast for September, but early signs are positive and we expect growth in TAR [total ad revenue] in Q3”.
At the time, media buyers estimated September was up 3%, with the company having projected a 4% decrease for July and a 7% increase in August.
According to its last interim update, ITV Studios is on course to realise mid-single-digit revenue growth for 2023. ITV also anticipates surpassing market growth rates as it continues to fortify its operations amidst robust global demand for its content.
For the coming three years, the group is seeking to achieve 5% average organic revenue growth annually, following 8% average organic growth recorded over the 18 months from 1 January 2022 to 30 June 2023.
The company has also expressed a commitment to sustaining an adjusted EBITA margin of between 13% and 15%.
However, due to the current inflation affecting the production market, the margin is anticipated to be at the lower end of this spectrum in the short term, as previously indicated.
Barclays analysts expect external group revenue to increase 1.6% to £858 million, with advertising up 2.0% to £427 million and ITV Studios external revenues growing 3% to £355 million.
Adding the shift from the football World Cup this time last year to the rugby World Cup this past quarter, the analysts said they feel the consensus forecast for a 6% quarterly ad decline "remains very optimistic".
There is also the matter of ITV’s £1.5 million investment in plant-based meat business THIS through the broadcaster’s Media for Equity fund.
Beyond Meat’s hugely disappointing IPO has put a downer on meat-free investments, so ITV stakeholders are watching this with a close eye.
Results are due on Wednesday, 8 November.