ITV profits wiped out as pandemic hits ad revenue

Image copyright ITV/Coronation Street Image caption Popular soap Coronation Street resumed filming in June

ITV has been through "one of the most challenging times" in its history, says chief executive Dame Carolyn McCall.

Profits at Britain's biggest free-to-air commercial broadcaster have tumbled as advertising revenues and production of shows were hit by the pandemic.

The scale of the impact came in figures showing pre-tax profits crashing 93% to £15m in the first six months of 2020.

But there are early signs that the firm behind Coronation Street and Love Island may be through the worse.

ITV said on Thursday it has restarted production on around 70% of its TV shows as lockdown measures have been eased.

And the company said it had beaten its target for the number of BritBox subscribers, the digital subscription service it created with the BBC.

"While our two main sources of revenue - production and advertising - were down significantly in the first half of the year and the outlook remains uncertain, today we are seeing an upward trajectory with productions restarting and advertisers returning to take advantage of our highly effective mass reach and addressable advertising platform, in a brand safe environment." said Dame Carolyn.

The company said advertising revenue for the April-to-June quarter fell 43%, driving a 17% decline in total external revenue for the six months to the end of June to £1.22bn.

Image copyright Getty Images Image caption Dame Carolyn said the future is uncertain, but ITV is in good shape to cope

ITV Studios paused the majority of its productions globally in mid-March as a result of Covid-19 restrictions, resulting in a 17% decline in studio revenue to £630m.

It restarted production on its popular soaps Coronation Street and Emmerdale in June. ITV said that of the 230 productions impacted or paused by the lockdown, about 70% have been delivered or were back in production.

Despite very early signs ITV could be emerging from the worst of the coronavirus impact, its shares fell more than 3% in early trading on disappointment that the company will not be paying a dividend this year.

Analysts warned that the competition from high-spending streaming services such as Netflix will get tougher.

Julie Palmer, partner at Begbies Traynor, said: "ITV bosses will be hoping that the launch of Britbox will go some way to claiming a stake in the ever-growing streaming market and will help reclaim some of the lost revenue.

"But, with the broadcaster facing stiff competition in the form of increased output from the likes of Netflix and Amazon Prime who are investing significant money into their subscription services, and other potential disrupting events on the horizon such as Brexit still to take effect, the situation could get worse before it gets better."

And Hargreaves Lansdown's equity analyst Emilie Stevens said that although ITV's access to "significant liquidity" meant it had enough cash to ride out the storm, everything rests on an advertising recovery.

"Advertising trends are likely to be subdued for some time, and it's hard to quantify at this point what the recovery is going to look like," she said.