ITV to cut $33M in costs amid Brexit uncertainty

Although the British TV and production giant expects double-digit growth by year's end, execs are planning to slash overhead costs in response to the UK's decision to leave the EU.
July 27, 2016

ITV is planning to cut £25 million (USD $32.79 million) in overhead costs for 2017 in the wake of the UK’s decision to leave the European Union.

“Against a backdrop of wider economic uncertainty following the EU referendum we have put in place a robust plan to allow us to meet the opportunities and challenges ahead,” ITV’s chief executive Adam Crozier said in a statement included in the company’s mid-year results report. “As part of this we are targeting a £25 million reduction in overheads for 2017.”

Meanwhile, the British broadcasting and production giant reported that production arm ITV Studios helped grow revenue by double digits in the year’s first six months. Total external revenue went up 11% to £1.5 billion (US$2 billion) thanks to a 31% jump in ITV Studios revenue to £651 million (US$854 million), primarily due to acquisitions.

ITV reported a 9% increase in adjusted profit before taxes of £425 million (US$558 million) and a 10% increase in adjusted earnings. Adjusted earnings before interest, taxes and amortization (EBITA) went up 10% to £438 million(US$575 million) and online, pay and interactive business grew 26% to £107 million (US$140 million), and net advertising revenue was flat at £838 million (US$1.1 billion).

Crozier said ITV expects to deliver double-digit revenue and adjusted EBITA growth for the full-year primarily due to recent acquisitions.

The report stated that ITV Studios’ performance was primarily driven by the recent acquisitions of Talpa Media, Twofour Group and Mammoth Screen.

The company has been snapping up indie producers as a way to shift revenue from advertising to production. ITV’s particular focus on producers operating in Europe and the U.S. meant that 50% of ITV Studios’ total revenue in the first half of 2016 came from outside the UK.

However, the producer’s total organic revenue excluding current and prior-year acquisitions and foreign currency fluctuations dropped 4% due to ITV America, which was impacted by the deliveries of Hell’s Kitchen and Duck Dynasty as well as scripted series Texas Rising. As a result, ITV America’s total revenue for the first half was down 34% to £96 million (US$126 million).

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