ITV plc Earnings Call: Digital Pivot and Studio Gains

ITV plc ((GB:ITV)) has held its Q4 earnings call. Read on for the main highlights of the call.

ITV plc’s latest earnings call painted a picture of a broadcaster in active transformation, balancing solid progress in studios and digital with persistent pressure in traditional TV ads. Management struck a constructive tone, pointing to cost discipline, digital momentum and sports rights as key supports, while openly acknowledging margin mix headwinds and timing risks in U.S. Studios and digital targets.

Transformation of Revenue Mix

ITV has now hit a key strategic milestone, with around two-thirds of total revenue coming from ITV Studios and digital M&E rather than traditional linear advertising. This shift underlines a deliberate diversification strategy that is reducing the group’s dependence on a structurally declining ad channel and is central to its long-term investment case.

Studios Revenue Growth and Scale

Studios revenue rose 5% to £2.13 billion, with external sales up 10% and U.K. and international revenues up 14%, underscoring growing clout with global streamers and digital platforms. The performance shows ITV’s content engine is increasingly global and less reliant on its own domestic channels for monetisation.

Studios Profitability and Margin Mix

Studios delivered adjusted EBITA of £297 million with a 13.9% margin, keeping it within its stated 13%–15% target band and still among the better-margin producers in the sector. However, management highlighted that a lower mix of high-margin catalogue sales is pressuring profitability, guiding margins towards the lower end of the range.

Digital Revenue and Ad Growth

Digital advertising revenue climbed 12% to £540 million, helping push total digital revenues up 10% to £614 million. Digital now accounts for 31% of total advertising revenue, showing that viewers and marketers are steadily following ITV into streaming and data-driven inventory.

Cost Discipline and Savings

ITV has continued to execute on structural cost savings, delivering £63 million of permanent non-content savings in 2025 and £253 million cumulatively since 2019. Within that, M&E contributed £32 million of permanent and £15 million of temporary savings, while Studios added £31 million, underpinning margins despite revenue mix changes.

Balanced M&E Profitability

Despite a weak linear ad backdrop, the M&E division held adjusted EBITA margin flat at 11.8%, helped by tight cost control. Content costs were cut by 5% and non-content costs by 6%, suggesting ITV is carefully sizing its schedule while still protecting key programming.

Strong Cash and Balance Sheet

Net debt closed the year at £566 million, with leverage at 1x, leaving ITV with meaningful financial flexibility for investment and shareholder returns. Profit-to-cash conversion was 65% for the year, below the roughly 80% three-year average but broadly in line with guidance and still supportive of its dividend.

Zoo 55 and Digital Distribution Momentum

Zoo 55, ITV’s digital distribution hub, generated more than 47 billion views globally, up over 30% year on year, with strong growth in FAST and social video. Management reiterated a path to about £120 million of high-margin digital revenue from Zoo 55 by 2027, highlighting its role as a scalable profit driver rather than just a reach play.

ITVX and Planet V Performance

ITVX has delivered a 25% compound growth rate in streaming hours and a 16% CAGR in digital ad revenue since 2022, showing traction with viewers and advertisers. Planet V, ITV’s self-serve ad platform, now leverages a base of around 40 million registered users and has attracted more than 1,500 new advertisers.

Dividend and Capital Allocation

The board proposed a final dividend of 3.3p, keeping the full-year ordinary dividend steady at 5p and returning roughly £190 million in cash to shareholders. Management reiterated its priority order for capital allocation, balancing investment in growth, disciplined leverage and consistent shareholder distributions.

Audience Reach and Sports Rights

ITV delivered 91% of the top 1,000 commercial audiences in 2025, underscoring its continued dominance in mass-reach TV. Exclusive commercial rights to an expanded FIFA Men’s World Cup and the new Men’s Rugby Nations Championship should further strengthen its live sport offering and advertising pull.

Linear Inventory Digitisation and Addressability

Around 30% of ITV’s linear ad inventory was enabled for targeted advertising by year-end, giving brands more sophisticated buying options. The company aims to increase that figure to roughly 50% by the end of 2026, blending the scale of broadcast with the precision of digital.

Linear Advertising Decline

Total advertising revenue fell 5% year on year, and management flagged a broader double-digit decline specifically in linear advertising. While digital growth is offsetting part of that drag, the remarks reinforced that the traditional TV ad market remains under structural pressure.

U.S. Studios Softness and Integration Costs

ITV noted that U.S. Studios performance was down year on year, citing timing of deliveries and short-term market softness, adding some volatility to an otherwise growing Studios division. The group also absorbed integration and reorganisation costs from recent label changes and four bolt-on deals, with synergies expected to come through over time.

Ad Market Timing and Digital Target Delays

The fourth quarter ad market was weaker than anticipated as brands paused spending ahead of budget cycles, though management said conditions in the first quarter have improved. The pivot from SVOD to AVOD means the £750 million digital revenue goal will be reached later than initially expected, introducing timing risk even as the underlying trajectory remains positive.

Strategic Uncertainty in M&E and Cash Conversion

The company confirmed it has held preliminary talks with Sky over a possible sale of the M&E business, adding a layer of strategic and execution risk until clarity emerges. This year’s 65% profit-to-cash conversion, while within guidance, lagged the roughly 80% three-year average, a weaker single-year outcome that investors will watch for normalisation.

Outlook and Guidance

For 2026, ITV expects “good” revenue growth in Studios with margins at the lower end of the 13%–15% range and performance weighted to the second half. M&E digital revenue is expected to keep growing strongly, total advertising in the first quarter should be down about 2%, and expanded football and new rugby rights are set to support advertising from the second quarter onward.

ITV’s earnings call underscored a business that is steadily reshaping itself for a digital, global content future while managing through legacy headwinds in linear advertising and U.S. production. For investors, the story remains one of solid execution on studios and streaming, tight costs and a maintained dividend, tempered by margin mix pressure and timing risks on both digital and strategic moves.