Could May Bring Record Advertising Losses for UK TV Channels?
by Glenn Baird - May 6, 2020
ITV’s advertising figures for April do not make good reading. The British TV company announced today that their April advertising figures were down by 42%. With the UK gambling industry abstaining from advertising for a least a month and no tangible end to the country’s lockdown it seems likely that things will have to get much worse before they can get any better.
At the beginning of March the TV company had estimated that revenue would drop by roughly 10%. This was based on a rise of 8% in February and with the figures levelling out in March it appeared that the estimate was on track for April.
Two of ITV’s biggest hitters, Emmerdale and Coronation Street, have seen a reduction in the number of episodes that have been aired each week. However, with no filming taking place just now, the backlog of episodes is bound to come to an end at some point soon, if the crews are unbale to get back to work.
The other big miss is sport. Quite simply, other than the virtual Grand National, there has been none. This will have meant a reduction in all sorts of advertising revenue, most notably, gambling advertising.
If all this wasn’t bad enough, the TV company will also have to cope without one of their biggest cash cows of the year. It was announced last month that Love Island would be cancelled. There can be no doubt that this show would have brought in fortunes in advertising revenue, given its popularity in the UK.
Richard Hunter, head of markets at interactive investor, has spoken about the drop in revenue, trying to keep a positive outlook on things:
“ITV will be hoping that however deep a recession may be, it is equally brief which could enable revenues to recover quickly,” he said.
“Although the company itself has withdrawn guidance for the immediate future, the market is optimistic on recovery prospects, with the general view of the shares as a buy remaining intact.”
Amidst severe criticism from the mainstream media in the UK the Betting and Gaming Council announced last week that all gambling advertising in the country on TV and Radio would be suspended from tomorrow until June the 6th.
The decision was met with a degree of derision from the aforementioned mainstream media who used the self-imposed ban as proof that lockdown was causing problems for at-risk gamblers and then the measures themselves were criticised for not including internet and social media advertising.
However, without any revenue from gambling advertising throughout the month of May it is very likely that UK based TV companies, like ITV who are reliant on advertising revenue will see even steeper reductions in May.
No one is suggestion that the decision to reduce gambling advertising during lockdown was not the correct one. It is paramount that operators in the UK do what they can to protect at-risk gamblers and a reduced presence on TV is certainly one way to do so. However, it is very likely that by doing so there will be an economic impact, not just on the gambling industry but on other industries linked to it.