ITV Plunges After Revealing ‘ITVX’ Streaming Platform Investment

(Bloomberg) -- ITV Plc shares plummeted as much as 18%, the most since the outbreak of the coronavirus pandemic, after Britain's biggest free-to-air broadcaster announced it would pay to replace and upgrade its streaming services.

The London-headquartered company revealed plans Thursday for ITVX, which will offer a free advertising-funded service and an ad-free subscription option. Later this year it will replace the company's free ‘Hub' digital video platform, which has faced some complaints for its quality in the past.

The new service now lies at the heart of a pledge from Chief Executive Officer Carolyn McCall to double digital revenues to at least 750 million pounds ($1 billion) by 2026. But she also announced spending plans to get there: content investment will ramp up to 1.35 billion pounds by 2023, while money will go into data, technology and streaming, as well as launch costs.

“What you've got is effectively a permanent step up in their programming cost base” without investors trusting that it will yield rising revenue, said Ian Whittaker, an independent analyst at Liberty Sky Advisors. “Effectively it will be downgrades to earnings that are coming through.”

For subscribers, ITVX will also bundle in Britbox, its streaming joint venture with the British Broadcasting Corp. ITV said it will announce pricing later this year.

In a break from its past, ITV said it would debut many new shows on ITVX months before its regular broadcast channels, adding content every week and promising “a growing range of partner content, with exciting announcements to follow in due course.” Today, ITV Hub has 4,000 hours of content while ITVX will launch with 15,000, the company said.

The company also reported pretax profit for 2021 that beat the average estimate of analysts surveyed by Bloomberg.