ITV has increased its pre-tax profits for the first six months of the year by 9% to £425m as growth at its production arm offset stalling TV ad revenues.
However, it says it plans to cut costs by £25m by 2017 in response to uncertainty over the fallout from the UK’s Brexit vote.
Total external revenues across the group were up by 11% to £1.5bn for the six months to the end of June, driven primarily by a 31% rise in revenues from ITV Studios, which makes programmes for both ITV and other broadcasters around the world.
ITV has invested heavily in Studios in recent years with acquisitions such as The Voice owner Talpa Media and Poldark producer Mammoth Screen in a bid to reduce its dependence on advertising revenues and the UK market.
The broadcaster said it expects to see a 1% decline in advertising revenue over the first nine months of this year but to outperform the market as a whole.
ITV’s chief executive, Adam Crozier, said that although there had been some impact on advertising in February following the announcement of the date of the referendum on EU membership, any effects from Brexit had not yet been felt.
“I don’t think the result of the vote changed anything,” he said. “That’s partly because it is too early to say, and partly because nothing much is going to happen very soon. it’s going to be a two to five-year process.”
He said that the cost savings would fall across the board and the bulk would not hit staff.
“I wouldn’t have thought staff costs will be anything like the lion’s share of this,” he said. “Any business across the country would be doing this just to get itself in shape for whatever will come.”
He added that he had not yet seen any sign that the weakness of the pound had encouraged overseas companies to explore buying UK firms, and said that any decisions would likely still be based on the broader qualities of the business, including ITV.
Asked whether the growing importance of ITV Studios to the company made him more concerned about the BBC’s plans to spin off its own production arm, Crozier said ITV did not object to the plans on a “point of principle”.
He added: “The only thing we’ve been very clear with is that has to be done on a properly commercially competitive basis.”
The company is recommending an increased dividend of 2.4p per share.
