ITV PLC (LON:ITV) has shelved its dividend and guidance for 2020 after seeing further sharp deterioration in advertising levels because of the social distancing measures put in place by the government.
Each 1% decline in total advertising revenue reduces the group's revenue and profit by around £17mln over the full year. The broadcaster and production company said advertising deferrals were now coming from categories outside of travel, which had been impacted first.
READ: To cut or not to cut: dividend divergence in the face of coronavirus
In recent days, the government advice on working practices and movement of people has also led to the ITV Studios arm suspending production on some of its programmes, including Coronation Street, Emmerdale and Loose Women.
While this will hit revenue and profit, depending on how long the restrictions are in place, the cost base is flexible and there is expected to be some offset from increased demand for library sales.
“We are actively taking measures to reduce costs and manage our cash flow,” said ITV chief executive Carolyn McCall.
The programme budget will be reduced by at least £100mln, and there will be £60mln on other savings, including discretionary spending and capital expenditure cuts.
Cancelling the 2019 dividend of 5.4p and withdrawing the previously announced intention for an 8p payout for 2020 will keep £300mln of cash in the business.
As well as £150m of unrestricted cash in the bank, a £530mln headroom in a bank facility, and another £300mln facility expiring in June 2021, ITV said it has no bond repayments until September 2022.
ITV said that as a major producer of unscripted content, including reality shows and others that have shorter lead times, it should be able to ramp up production quickly once the crisis is over.