ITV plc will make £30m of cuts in its media and entertainment business after advertising revenue dropped 8% in Q3.
Despite the fall in demand for advertising, its CEO said the £1.6 billion sale of the business to Sky was progressng as planned.
The Culture Secretary recently formally intervened in the deal – which includes ITV’s free-to-air channels and on-demand streaming service ITVX – and tasked two regulators with scrutinising it.
Total advertising revenue (TAR) was down 1% year-on-year for the nine months to 30th September, which ITV said outperformed its broadcast competitors but was slightly below previous guidance.
The company said the weakness was due to continuing broader macroeconomic uncertainty, increased digital advertising on global streaming platforms and the impact of ‘less healthy food’ regulations.
The latter, which came into effect in January, cites that paid-for TV and on-demand programme services cannot broadcast ads for unhealthy products between 5.30am and 9pm.
Looking ahead, ITV expects TAR to be down around 5-10% in the fourth quarter and down around 2-3% for the full year 2026, compared with the same periods in 2025.
To align its costs with advertiser demand, ITV said it has identified £30 million of additional temporary savings in media & entertainment in the fourth quarter.
These comprise £25m of content savings and £5m of discretionary non-content savings.
ITV expects its total content budget for 2026 to be c.£1.2 billion.
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In July ITV plc said US telecoms giant Comcast had agreed to sell Sky’s Love Productions business to ITV Studios as part of the £1.6bn takeover.
ITV Studios is one of the world’s biggest production companies and is behind shows including I’m a Celebrity. It will remain listed on the London Stock Exchange.
Carolyn McCall, ITV chief executive (pictured), said: “Despite a more challenging market, we remain on track to deliver good revenue growth in ITV Studios and continued profitable digital revenue growth in Media & Entertainment (M&E) over the full year.
“We are taking decisive action, aligning our investment with advertiser demand to deliver additional temporary content and discretionary non-content savings in Q4.”
M&E total revenue declined 1% over the nine months, with 7% growth in digital revenue offset by the decline in linear advertising.
Digital advertising revenue grew 6%, and total digital revenue reached £461m against £432m a year earlier.
ITV said ITVX delivered record viewing during the period, driven by the final matches of the World Cup, alongside titles such as Trigger Point, Big Brother and Love Island.
Total streaming hours rose 29% to 2,153m, and ITV’s share of commercial viewing was 32.7%, up from 31.8%.
M&E non-advertising revenues declined 3% over the nine months, which ITV said was as expected.
Group revenue was down 1% at just under £2.8bn.
ITV Studios total revenue declined 1% to above £1.3bn, with internal revenue up 4% and external revenue down 4%.
ITV said the external decline reflected the expected phasing of production deliveries and licensing deals, which are heavily weighted to the fourth quarter.
McCall said ITV has a greater proportion of its full year Studios revenue secured than at this point last year.