This article first appeared on GuruFocus .
Release Date: July 31, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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ITV PLC ( ITVPF ) delivered a solid H1 performance with both divisions achieving revenue growth, including a 2% increase in ITV Studios revenue and a 3% rise in total advertising revenue.
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The sale of the M&A business to Sky is a transformative deal that will unlock significant shareholder value, including a 950 million net cash return and a 100 million share buyback.
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ITVX continues to show strong momentum with viewing up 27% and digital revenues growing 13%, reaching over 20 million monthly active users in June.
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ITV Studios has a strong pipeline of high-budget dramas and unscripted formats scheduled for H2, providing good revenue visibility and supporting full-year guidance.
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The company maintains strong cost discipline, reducing overall content costs by 2% even with the World Cup, and is on track to deliver 20 million in cost savings for the full year.
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The balance sheet remains robust with net debt of 652 million and a leverage ratio of 1x, supporting continued shareholder returns and investment.
Negative Points
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ITV Studios EBITDA declined 9% to 97 million with a margin of 11%, reflecting the expected H2 weighting and lower profitability in the first half.
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Q3 total advertising revenue is expected to decline around 5%, impacted by macroeconomic headwinds, political uncertainty, and the aftermath of the World Cup.
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The company faces uncertainty in Q4 advertising revenue, with limited visibility and potential for advertisers to reduce spend after the World Cup.
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Cash conversion was lower at 63% due to working capital build-up, which may partially reverse but indicates near-term cash flow pressure.
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The regulatory process for the M&A sale could lead to a Phase 2 CMA review, potentially delaying completion until H2 2027 and creating uncertainty.
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Non-content costs increased due to higher marketing spend, which could pressure margins if not offset by revenue growth.
Q & A Highlights
Q: Why don't ITVX revenues grow in line with the 27% viewership growth, and is there downward pressure on pricing due to increased digital video inventory from competitors like Netflix, Amazon, and Disney? A: Carolyn McCall (CEO) and Chris Kennedy (CFO/COO) explained that ITV manages ad load to balance supply and demand. Addressable advertising is sold at a fixed price with options for premium targeting, and ITVX inventory is exclusively available through Planet V, allowing ITV to maintain high CPMs without discounting. The ad load fluctuates based on viewing levels, such as during the World Cup, but the company remains in full control of its yield.
Q: Can you provide more color on the Q3 M&A outlook, which is expected to be down around 5%, and how might this impact full-year EBITDA? A: Carolyn McCall (CEO) noted that Q3 weakness is due to macro factors, including the change of UK Prime Minister and the impact of the Iran war on cost of living and inflation. July was very strong, but some advertisers moved spend from Q3 into June/July for the World Cup. For the first nine months, TAR is expected to be flat year-on-year, which is a strong performance given the headwinds. Chris Kennedy (CFO/COO) added that it's too early to comment on Q4 EBITDA, but the company will react to the ad market by tailoring scheduling and has mitigation planning in place without announcing further savings.
Q: What is the growth algorithm for ITV Studios to achieve mid-single-digit growth, and what will drive it over the medium term? A: Carolyn McCall (CEO) highlighted that ITV Studios operates in a large, fragmented 235 billion market. Growth will come from continued expansion with streamers, which now account for around 30% of revenue (up from 5% five years ago), particularly in high-quality drama and unscripted formats. Digital growth through Zoo55, targeting 120 million revenue by 2027, and increasing market share in the fragmented global content market are also key drivers. More details will be provided at the Capital Markets Day in H1 2027.
Q: How long will it take to complete the 100 million share buyback? A: Chris Kennedy (CFO/COO) stated that the buyback is expected to take between 9 and 12 months, running as fast as liquidity allows.
Q: Is there a risk that World Cup-related ad spend was brought forward from Q4, and what is the outlook for Q4? A: Carolyn McCall (CEO) said it's too early to give a view on Q4. While some advertisers may have spent the majority of their budgets during the World Cup and could reduce Q4 spend, there is little visibility at this stage. Q4 is typically driven by Christmas advertising, and the company is having ongoing conversations with advertisers.
Q: Can you explain the rationale behind the sale of the M&A business to Sky and the expected shareholder returns? A: Carolyn McCall (CEO) reiterated that the transaction is transformative, enabling a 950 million net cash return to shareholders (excluding contingent consideration) and unlocking the value of ITV Studios. The Board declared an interim dividend of 1.7p per share and announced a 100 million share buyback as an early return of the expected proceeds. The transaction is expected to complete in H2 2027 if it goes to a Phase 2 CMA review.
Q: What were the key financial highlights for H1 2026, and how does this align with full-year guidance? A: Chris Kennedy (CFO/COO) reported total Studios revenue grew 2% to 912 million (3% organic), with EBITDA down 9% to 97 million due to H2 weighting. M&A delivered 850 million in total advertising revenue (up 3%), with digital revenues growing 13% to 307 million. Group EBITDA was flat, and the company remains on track for full-year guidance of good Studios growth and strong profitable digital revenue growth. Studios margins are expected at the lower end of the 13%-15% target range.
Q: How is ITV managing costs, and what is the status of the cost-saving program? A: Chris Kennedy (CFO/COO) confirmed strong cost discipline, with overall content costs down 2% despite the World Cup. Non-content costs rose due to marketing for the new brand campaign, but excluding marketing, they were up only 3%, with 4 million of permanent savings delivered in H1. The company remains on track to deliver 20 million of cost savings for the full year, bringing cumulative savings since 2019 to 273 million.
Q: What is the status of the regulatory process for the sale of M&A to Sky? A: Carolyn McCall (CEO) stated that the process is led by Sky, with ITV working closely with Ofcom, the CMA, and DCMS. The CMA has launched its review, and ITV expects the Secretary of State to issue a public interest intervention notice. The company remains confident of approval given the pro-competitive rationale, though a Phase 2 review could push completion to H2 2027.
Q: Can you provide details on the performance of ITVX and its advertising platform, Planet V? A: Carolyn McCall (CEO) highlighted that ITVX viewing grew 27% in H1, with June being the first month with over 20 million monthly active users. Planet V, the addressable advertising platform, has attracted over 1,700 new advertisers since launch, and ITV's in-house sales team has partnered with over 1,300 brands (up from 800 at year-end). The launch of Comcast Universal Ads in the UK will further accelerate the SME strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
