ITV Scraps Dividend After ‘Most Severe’ Ad Drop Ever

(Bloomberg) -- ITV Plc said it wouldn't pay an interim dividend or provide an outlook for the rest of the year after the pandemic led to its worst-ever drop in advertising sales.

Total ad revenue for the second quarter at Britain's biggest free-to-air commercial broadcaster plummeted 43%, and was down 21% across the first half of 2020. That was the “most severe decline in the history of ITV,” the London-based company said in first-half results Thursday.

“The future is still uncertain due to the pandemic,” said Chief Executive Officer Carolyn McCall. “But the action we have taken to manage and mitigate the impact of Covid-19 puts us in a good position to continue to invest in our strategy of transforming ITV into a digitally led media and entertainment company.”

ITV shares fell as much as 5.4% and recovered to a 1.3% drop as of 11:12 a.m. in London. Since taking the lead role at the company at the start of 2018 McCall had managed to arrest the slide in the shares by the end of last year. The pandemic has undone her efforts, and the company's market capitalization is now about a quarter of what it was five years ago.

Adjusted earnings before interest, tax and amortization fell 50% in the first six months of the year to 165 million pounds ($217 million) from a year earlier, on revenues which had fallen 17%.

Ebita was 12% better than expected by Barclays analysts led by Julien Roch, who nevertheless pointed to the lack of outlook and subscriber numbers for the company's new Britbox streaming service as negatives.

A drop in ad sales in the second quarter follows a 2% gain in the first three months of the year. As pandemic restrictions took hold, revenues fell 46% in May, improving to a 23% drop in July.

Although the month-to-month advertising trends are positive, there are far more late bookings than ever before, which makes it difficult to share an outlook, McCall told analysts in a conference call.

The financial woes came despite a 4% rise in ITV's total viewership, as audiences were stuck at home. The company is now identifying ways to cut costs permanently. Beyond the pandemic, it also still sees a risk of Brexit hitting the advertising market, and has to worry about a looming U.K. ban on commercials for sugary, fatty and salty foods.

©2020 Bloomberg L.P.