ITV looks to Euro 2016 to lift advertising revenues as viewing figures fall

Broadcaster pays special dividend after underlying profits rise by 18 per cent

ITV hit show The XFactor line-up (ITV)

News that consumer firms are pushing back their spending on television commercials to coincide with this summer’s Euro 2016 football tournament has spooked investors in ITV, despite the broadcaster offering shareholders a bumper windfall.

ITV gave a gloomy assessment of its expected advertising revenues for the first part of this year, saying that advertisers were delaying their purchases of TV time until June to coincide with the tournament, which normally attracts big audiences.

ITV’s net advertising revenue, a closely watched measure for investors, is expected to remain flat for the first quarter of 2016, compared with a 12 per cent increase in the same period last year.

The broadcaster’s share price fell by 3.5 per cent to 240.9p, heading towards a 12-month low and deflating the recent buoyancy fuelled by the takeover speculation swirling around the company.

Despite this, the ITV chief executive, Adam Crozier, said he still had high hopes for Euro 2016 and expected advertising revenues for the full year to be positive. “With the number of teams up from 24 to 32, there are a lot more games for us to show, and having more of the home nations there is great,” Mr Crozier said.

“As ever with such tournaments, the ad spend will shift around, and we expect the first quarter to be weaker. But then we expect to be very strong during the Euros, as we have been during the Six Nations Rugby, particularly for brands and products aimed at men.”

On a month-by-month basis, January’s net revenues from advertising were down 1 per cent on last year, and February’s were 4 per cent lower. They are forecast to be 5 per cent higher in March before falling again by 5 per cent in April, ITV said.

Andrew Jones, an income fund manager at Henderson, said: “There is always lots of short-term noise around monthly advertising trends, share of audience, changing viewing habits and so on, but ITV remains the most effective way for advertisers to reach millions of consumers.”

Mr Crozier did manage to cheer investors with a £400m special dividend paid out of cash generated by ITV, and with a higher-than-expected ordinary dividend paid out of its earnings, which jumped by 20 per cent last year.

ITV reported its sixth straight year of double-digit profits growth, despite falling audience figures. Underlying profits before tax rose by 18 per cent for the full year to £843m, with total revenues climbing by 14 per cent to £3.3bn. Investors will receive an ordinary dividend of 6p per share and a special dividend of 10p, which Mr Crozier said reflected confidence in the year ahead.

However, ITV admitted that its share of family viewing fell by 3 per cent over the year as a result of some shows not performing as well as expected and a strong performance from the BBC.

Mr Crozier admitted that ITV had to do something about its light entertainment programming, as audiences for The X Factor and Britain’s Got Talent were dwindling. He said: “We need more, and the job is to buy in new shows and love to death the ones we have got. Both Britain’s Got Talent and The X Factor are really good for ITV and I’m a big supporter of Simon Cowell – but I’m not going to negotiate with him in public.”

New programmes scheduled for this year include Victoria, a big-budget, eight-part drama about the monarch’s early life, and the revival of the 1990s comedy drama Cold Feet. Brief Encounters, a forthcoming comedy about the early days of retailer Ann Summers, will be based on the memoirs of its chief executive, Jacqueline Gold.