ITV PLC (LON:ITV) delivered a slight increase in full year earnings as growth in the online and studio businesses offset a decline in TV advertising revenue.
The UK broadcast company reported adjusted underlying earnings (EBITDA) of £885mln in the year to 31 December 2016, 2% higher than £865mln a year earlier.
Total revenue rose 4% to £3.6bn from £3.3bn, driven by online advertising and ITV Studios.
Online, pay and interactive revenue rose 23% to £231mln from £188mln on the back of an increasing trend towards view on demand.
ITV Studios, which produces TV programmes 'Victoria', 'I’m a Celebrity…Get Me Out of Here' and 'Cold Feet', posted a 13% rise in revenue to £1.4bn from £1.3bn. The group said 50% of the division’s revenues came from outside the UK.
The strong performance in online and ITV studios offset a 3% fall in net advertising revenue (NAR) to £1.6bn from £1.7bn, which ITV blamed on political and economic uncertainty.
Excluding NAR, revenue grew 11% to £1.9bn from £1.6bn and represented 53% of Total group revenue.
The broadcast and online arm reported flat revenue of £1.1bn, as an increase in non-NAR mitigated a fall in NAR. Within the division, ITV Family, which includes ITV Breakfast and ITV Encore, reported a 4% drop in NAR despite the benefit of recently acquired UTV.
Following a “good performance” the company proposed a final dividend of 4.8p, taking the full year dividend to 7.2p, a 20% rise on the prior year. The board is proposing to pay a special dividend of 5p on top of that.
"ITV delivered a good performance in 2016 as we continue our strategy of rebalancing and strengthening the business creatively, commercially and financially,” said chief executive Adam Crozier.
“The continued growth in revenue and adjusted profit, despite a 3% decline in spot advertising revenues resulting from wider political and economic uncertainty, is clear evidence that our strategy is working and remains the right one for ITV.”
Turning to the outlook for 2017, ITV expects to see further growth in non-NAR, buoyed by online and ITV Studios.
ITV Family NAR, however, is forecast to fall 6% in the four months to the end of April, due to ongoing economic uncertainty.
“Over the full year we expect to outperform our estimate of the television advertising market. On-screen we are performing well and we remain focused on delivering both mass audiences and the key demographics,” the group said.
ITV said it is on track to deliver £25mln of overhead cost savings in 2017 and will use its budget to invest further in ITV Studios production.
ITV Studios EBITDA is expected to be broadly flat in 2017, despite an anticipated increase in revenue, due to further investment.
Analysts at Liberum reiterated its rating on the stock at 'top buy' after what it called an upbeat set of full year results despite a challenging TV advertisting environment.
"Moreover, their comments about the potential for retransmission revenues are likely to be taken well and the strong continued growth in high-margin online revenues should help support profit growth.
"Moreover, we suspect the market is not fully aware of the potential boost coming from the extra episode of 'Coronation Street' that launches in the Autumn, just when ITV’s comps are easy.
Shares in ITV rose 4.29% to 211.30p in afternoon trade.
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