ITV has reported revenue growth of 2 percent in the first half of the year and revealed a £100 million ($135m) sharehold buyback in what CEO Carolyn McCall has described as a show of “commitment to attractive shareholder returns” in the wake of Sky‘s £1.6 billion ($2.13b) acquisition of the broadcaster’s network and streaming businesses.
In the first results since the industry-rattling mega-deal was announced, ITV said the buyback and interim dividend of 1.7p totaling around £60 million ($80m) represents an “early return of part of the previously announced £950 million net cash return expected on completion of the sale.” McCall said on a call with reporters early Friday: “The announcement of the sale […] was a defining moment to ITV.”
“And crucially,” she added, “it will also unlock the value of ITV Studios.” (The company’s production arm is not part of the deal, though the report shows Sky will commit to buying £2.1 billion in ITV Studios content between 2028 and 2032.) After news of the deal, the focus for ITV will likely be on its content and big-hitters at ITV Studios (Love Island, Rivals at Disney+), making it a potential takeover target.
McCall mentioned the Sky-ITV transaction is subject to regulatory approval, with the U.K.’s Competition and Markets Authority having launched its review. Given this is a media merger, ITV is expecting Culture Secretary Lisa Nandy to issue a Public Interest Intervention notice “in due course,” but they still estimate the merger will complete around a year from now. They have not interacted with Nandy since announcing the deal, McCall also said.
A combined Comcast-owned Sky and ITV would create a formidable British media group. Under the proposed structure, Sky would acquire ITV’s networks and streaming businesses (Media & Entertainment) — including the ITV channel portfolio and ITVX — while ITV Studios, the production outfit behind franchises such as Love Island, Britain’s Got Talent and Netflix hit Fool Me Once, is to be spun off as a standalone listed company, reconfirmed by McCall on Friday.
The merged operation will sit alongside Comcast’s NBCUniversal assets, bringing together ITV’s mass-reach advertising business, public-service broadcasting obligations and sports rights with Sky’s subscription TV, streaming, broadband and mobile operations.
Media & Entertainment (M&E) delivered a run-of-the-mill first-half performance, with total revenue up 2 percent. Total advertising revenue increased by 3 percent, with Q2 up 8 percent year-on-year. This was driven by the men’s World Cup, which attracted strong advertising and sponsorship demand from both U.K. and global brands across advertising categories, and “supercharged engagement on [streaming platform] ITVX,” according to the report, which delivered record H1 viewing, up 27 percent, with digital advertising revenue up 13 percent year-on-year.
Notably, ITV Studios’ revenue in the U.K. was up 17 percent this half-year, but down in the U.S. by 17 percent and internationally by 24 percent, suggesting the company could be hitting a wall when it comes to that much-needed U.S. expansion.
Looking ahead, the company has “good visibility” over the full-year outlook and revenue, margin and profit will be weighted to H2 and particularly Q4, when a “really strong delivery schedule” comes into play. This includes The Gentlemen, The Woods and SuburraMaxima for Netflix, Line of Duty season seven and Vigil season three for the BBC.
