ITV H1 2025 Earnings Report

ITV EPS Results

• Actual EPS: GBX 1.80
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

ITV Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

ITV Announcement Details

• Quarter: H1 2025
• Date: 7/24/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 24, 2025
• Conference Call Time: 4:30AM ET

ITV (LON:ITV) is a vertically integrated producer broadcaster and streamer, consisting of ITV Studios and Media & Entertainment. ITV Studios is a scaled and global creator, owner and distributor of high-quality TV content. It operates in 12 countries, across 60+ labels and has a global distribution network. It is diversified by genre, geography and customer in the key creative markets around the world. Media & Entertainment is the largest commercial broadcaster and streamer in the UK, delivering unrivalled audience scale and reach. It distributes content through ITVX, our free advertiser-funded streaming service, and our free-to-air linear TV channels.

ITV H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: ITV delivered a better-than-expected H1 performance under its More Than TV strategy, expects full-year resilience driven by cost efficiencies, and declared an interim dividend of 1.7p per share.
• Positive Sentiment: Digital growth accelerated with ITVX streaming hours up 15%, MAUs up 9%, and digital advertising revenue up 12%, driving overall digital revenues to £271 million in H1.
• Positive Sentiment: ITV Studios grew total revenue by 3% in H1 (external revenue +11%), with US revenue up 37%, while margin normalized to 12% and remains on track for 13–15% full-year EBITA margin.
• Positive Sentiment: Disciplined cost management delivered £23 million of permanent non-content savings in H1 and raised the full-year savings target to £45 million (from £30 million) despite one-off costs rising to £40 million.
• Negative Sentiment: Exceptional items guidance for 2025 increased to around £100 million (up from £45 million), driven by additional restructuring and acquisition-related costs.

Presentation

[Carolyn McCall, Chief Executive at ITV]

Good morning, and welcome to ITV's 2025 Interim Results. I'm here with Chris Kennedy, who you all know, our CFO and COO. I will hand over to Chris shortly to to talk you through our financial and operating performance. First, I just want to start with a very quick overview. ITV has transformed into a leaner, more digital and diversified business as we continue to successfully execute the second phase of the More Than TV strategy.

[Carolyn McCall, Chief Executive at ITV]

We are confident we are creating value both now and in the long term. This confidence comes from five key drivers. First, we're seeing attractive growth in ITV Studios second, our investments in ITV X and Planet V are driving rapid growth in digital advertising revenues third, our ability to deliver mass commercial audiences is highly valuable to advertisers fourth, disciplined cost management supports healthy operating margins across the business, and that's being implemented right across our business. And fifth, with our strong cash generation, we are funding investment in our key strategic priorities. Together, all of these drives profitable growth, strong cash generation and really attractive returns to shareholders.

[Carolyn McCall, Chief Executive at ITV]

We've delivered a better than expected performance in the first half of this year. While the economic environment, as you all know, remains uncertain, we now expect a better downturn for the full year driven by our increased cost efficiencies. In line with our dividend policy, the Board has declared an interim dividend of 1.7p, giving a total payment of around £60,000,000 I'm now going to hand over to Chris to go through the numbers in more detail.

[Chris Kennedy, Group COO & CFO at ITV]

Thank you, Carolyn. Good morning, everyone. We're really pleased with the first half performances of both businesses. And today, we're announcing a further £15,000,000 of permanent noncontent savings underpinning our confidence for the full year. The year on year first half comparators in both divisions are worth some explanation.

[Chris Kennedy, Group COO & CFO at ITV]

Studios margin in the first half of last year was unusually high as our customers bought high margin back catalog to compensate for the lower levels of original commissioning. This year, H1 margin has returned to a more normal level. And in Media and Entertainment, the year on year decline in total advertising revenue is entirely due to the tremendous success of the men's euros last year. TAR in H1 twenty twenty five is 2% higher than in 2023, and we expect M and E to outperform the TV advertising market year on year in the second half of 'twenty five. ITV Studios remains on track for good growth in total revenue over the full year at a margin of 13% to 15%.

[Chris Kennedy, Group COO & CFO at ITV]

Revenue grew by 3% in the first half of the year. External revenue was up 11%, reflecting strong demand from and the timing of deliveries to global streaming platforms. And this more than offset the decline in internal revenue, which was due to the phasing of productions and the absence of Saturday Night Takeaway. Studios UK was up 7%, boosted by deliveries from labels acquired last year, and international was up 2%. The U.

[Chris Kennedy, Group COO & CFO at ITV]

S. Revenue grew 37%, driven predominantly by a high volume of unscripted deliveries. Global partnerships, our distribution and formats business, saw revenues down as expected compared to the exceptionally strong H1 last year. EBITA margin decreased 3.7 percentage points to 12%, with adjusted EBITA down 21% following the exceptionally high H1 twenty twenty four margin. Sales and margin will both be higher in H2, driven by deliveries, including Rivals Season two for Disney plus Love Island U.

[Chris Kennedy, Group COO & CFO at ITV]

S. Beyond the Villa for Peacock, After the Flood Season two for ITV and The Guest for the BBC. High margin catalog sales are also weighted to the second half. Studios delivered £11,000,000 of savings in the first half, which helped offset inflation and funded investments in creative talent and development. The results included a foreign exchange impact of £12,000,000 in total revenue and £3,000,000 in adjusted EBITA, driven by the fall in the U.

[Chris Kennedy, Group COO & CFO at ITV]

S. Dollar and the euro. If rates remain at current levels for the rest of the year, there'll be a further impact of around £8,000,000 in revenue and £2,000,000 in EBITA. Moving on to Media and Entertainment. Total advertising revenue was down 7%, which was better than guidance.

[Chris Kennedy, Group COO & CFO at ITV]

ITVX continues to deliver good growth in audiences with total streaming hours up 15% and MAUs up 9%. And Planet V successfully monetizes these audiences with digital advertising revenue up 12%. Overall, digital revenues were up 9% to £271,000,000 Other revenue streams decreased in the year as expected and total revenue was down 8%. Content costs were 2% lower than prior year due to the absence of a major sporting event. And over the full year, we now expect content costs to be around £1,230,000,000 £20,000,000 below the £1,250,000,000 originally guided.

[Chris Kennedy, Group COO & CFO at ITV]

This decrease reflects the timing of the voice, which moves to H1 twenty twenty six, and channel rationalization as we closed ITV B, launched ITV Quiz and invested in ITV2. The effective use of our extensive viewer data has helped to strengthen our commissioning windowing decisions. As a result, we can make our content budget work harder, delivering the audiences our advertisers want whilst maintaining overall content spend at around current levels. Our ongoing cost program delivered £12,000,000 of noncontent savings in H1, and this enabled us to invest in our commercial outcomes program at the same time as reducing noncontent spend 9% year on year. Adjusted EBITA decreased by 54%, reflecting M and E's high operational gearing.

[Chris Kennedy, Group COO & CFO at ITV]

And finally, on advertising outlook. We expect total advertising revenue to be marginally down in Q3. This reflects the tough comparative from the final knockout matches of the men's euros in July 2024. Although the macro environment remains uncertain, we're pleased with the initial view of Q3 advertising. A new regulation to restrict less healthy food advertising will come into effect in January 26.

[Chris Kennedy, Group COO & CFO at ITV]

ITV, along with other advertisers and media owners, have agreed to voluntarily implement the restrictions early from October 1 year. We're pleased with the outcome of the government review, which has confirmed that these restrictions only apply to products and not to the underlying brand. And we've been working hard with advertisers over a number of months to mitigate the impact, and the revenue this year should remain largely unaffected by the restrictions. Turning to the balance sheet and cash flow. We maintained a robust balance sheet and cash flow was strong.

[Chris Kennedy, Group COO & CFO at ITV]

Cash conversion was 109% on a rolling twelve month basis, and we expect cash conversion to be around 80% on average over the medium term. Our net debt at the end of the period was £586,000,000 and our net debt to adjusted EBITDA leverage was 1.1x. As a reminder, net debt at the June included £182,000,000 of cash held for the buyback. During the first half, we secured a £300,000,000 term loan facility, which will be used to refinance our £300,000,000 eurobond when it matures in 2026. And our accounting surplus on the pension scheme is £212,000,000 We remain committed to our capital allocation framework.

[Chris Kennedy, Group COO & CFO at ITV]

We continue to invest in profitable organic growth. Our investments in ITVX and Planet V has already been fully recouped. Ongoing investment includes Zoo fifty five and our outcomes and SME initiatives. We're preserving our investment grade balance sheet. And as Carolyn mentioned, the Board have declared an interim dividend of 1.7p per share.

[Chris Kennedy, Group COO & CFO at ITV]

In total, over £1,400,000,000 has been returned to shareholders since 2018. In April, we made another small bolt on acquisition, a U. K. Scripted producer called Moon Age Pictures, producer of The Gentleman for Netflix. And just this week, we've acquired a Spanish scripted producer, Plano A Plano Studios.

[Chris Kennedy, Group COO & CFO at ITV]

And finally, in line with our commitment to return surplus capital, we completed the £235,000,000 share buyback program in April. We've made great progress on transforming ITV into a leaner, more agile company. Through our strategic cost program, we're optimizing our cost base to enhance profitability and to invest in the growth drivers. In the first half of twenty twenty five, we delivered £23,000,000 of noncontent cost savings. And today, we've announced an additional £15,000,000 of savings for this year.

[Chris Kennedy, Group COO & CFO at ITV]

The savings are coming from operational and technology efficiencies, permanent reductions in discretionary spend and organizational redesign. We're also increasingly using AI across the business to drive further efficiencies. In total this year, we'll deliver £45,000,000 of permanent incremental noncontent cost savings, up from the previous guidance of £30,000,000 We expect that the total one off cost to deliver these savings will be £40,000,000 up from £25,000,000 originally guided. Looking at the full year outlook and key planning assumptions, those I've not already covered and which are changing are: we're increasing our guidance for exceptional items for the full year to around £100,000,000 up from £45,000,000 This is due to one off costs associated with our increased savings target and structural changes and earn out accruals for our recent acquisitions, all of which are noncash. Exceptional costs this year are unusually high, and we expect them to reduce considerably next year in the absence of further acquisitions.

[Chris Kennedy, Group COO & CFO at ITV]

The cash impact of exceptionals this year is expected to be around £60,000,000 Adjusted financing costs will be slightly higher than we originally anticipated at £45,000,000 And the adjusted effective tax rate is expected to be slightly higher at around 27% over the medium term. And now back to Carolyn.

[Carolyn McCall, Chief Executive at ITV]

Thank you, Chris. As you all know, our strategic vision is to be a leader in U. K. Advertiser funded streaming and an expanding global force in content. Our strategy is based on three key pillars, which you are now very familiar expanding studios, supercharging streaming and optimizing broadcast.

[Carolyn McCall, Chief Executive at ITV]

Our successful execution of strategy to date has transformed the business, as we've said. We it makes us it puts us in a really strong position actually to compete and succeed in a competitive market. Taking each pillar in turn, I'm going to demonstrate this. So let's look at ITV Studios first. As you know, the global content market is really big.

[Carolyn McCall, Chief Executive at ITV]

In 2025, it is estimated to be over $230,000,000,000 actually, excluding the Hollywood film studios, and this is a CAGR of around 3% over the last four years. ITV Studios holds an enviable position within this market and remains incredibly well placed to gain continued market share. The business has significant competitive advantages underpinning its clear right to win in the market. These form the bedrock of Studios' growth. It ensures resilience and contributes directly to its margins.

[Carolyn McCall, Chief Executive at ITV]

Now this growth is driven by its ability to attract and retain leading talent, which has been enhanced through talent deals and strategic acquisitions, which also deliver cost and revenue synergies. We also operate in the key growth segments of the market, giving us real advantage. It helps us build a strong creative pipeline of programs, and it allows us to leverage our deep catalog of highly monetizable IP. The business is very resilient. That's enabled by its scale and diversification, its deep relationships with all the major streamers and networks and importantly, a culture of cost discipline, which is embedded within ITV Studios, and that provides flexibility to navigate market shifts, and it underpins its ability to achieve those industry leading margins.

[Carolyn McCall, Chief Executive at ITV]

At the full year, I talked about the launch of Zoo fifty five, our new studios label. We set that up to drive high margin growth from the monetization of our extensive IP through digital distribution, direct to consumers using data driven audience insights and leveraging AI to deliver content more effectively and efficiently, for example, using dubbing tools and subtitling tools. Now we're expanding significantly our presence in social video, fast channels or free ad supported channels and through gaming. The business has made really good progress. We're pleased with the progress so far this year.

[Carolyn McCall, Chief Executive at ITV]

We've scaled the number of global social video channels for our content, particularly across YouTube, Facebook and TikTok. We've seen a really strong increase in viewing with viewing hours up over 30%. For example, on TikTok, Love Island content alone has generated over 7,000,000,000 views globally. Across VAST enabled, we operate over 160 channel streams on platforms globally, up from around 100 at the year end and have entered into new partnerships with Tubi and Zumo. Our games portfolio continues, as I said, to go from strength to strength.

[Carolyn McCall, Chief Executive at ITV]

For example, the Love Island app was one of the top 10 games downloaded in The U. S. In June. So we are very confident we will double our Zoo 55 revenue from 2024 to 2027 to around £120,000,000 The quality of ITV Studios' creative output, I think you all know, is world class, and it's got a really strong track record. And this slide really demonstrates that.

[Carolyn McCall, Chief Executive at ITV]

We have an incredibly exciting pipeline across scripted, unscripted for a broad range of customers globally. There are many recommissions on here, as you can see, and that's really a testament to the team and I think the proven track record I've just mentioned. Studios also has a growing slate of streamers with whom we have, as I said earlier, really solidified our relationships. We've delivered high quality content to them that consistently attract strong audiences. For example, Better Sister for Amazon and Love Island U.

[Carolyn McCall, Chief Executive at ITV]

S. For Peacock, breakout hits, both featured in the top five biggest streaming shows in The U. S. In June. Our key financial targets for ITV Studios are to grow Studios organic revenue on average by 5% to 2026 ahead of the market at a margin of 13% to 15%, and we will achieve that.

[Carolyn McCall, Chief Executive at ITV]

We're on track to achieve that. Now let's turn to M and E, which includes our pillars of supercharging streaming and optimizing broadcast. It, of course, remains a strong and unique asset, M and E, and we now have the agility, the capability and the platform to make the most of new revenue opportunities. M and E has an unparalleled commercial proposition in The UK. We deliver mass reach.

[Carolyn McCall, Chief Executive at ITV]

We deliver targeted advertising. And alongside that, we have creative and commercial partnerships, second to none, in a brand safe and measured environment. Now that's our superpower. It's really reinforced by our deep relationships going back many, many years with advertisers and partners. We've also recently renewed our carriage deal with Sky, reflecting our long standing and mutually beneficial relationship.

[Carolyn McCall, Chief Executive at ITV]

I think you all know that ITV is the commercial leader in scale and reach. I think it's worth reiterating because actually ITV's share of commercial big screen viewing is of the same scale as Netflix, Amazon and Disney plus all put together. ITVX and Planet V are very well established now and ensure M and E continues to adapt to changing viewer habits and to advertiser needs. And you also know M and E has excellent cost and financial discipline, and the business is highly cash generative. So our supercharge streaming pillar now, which I'm going to talk about, aims to drive, of course, digital viewing through ITVX and maximize fast growing digital advertising revenues through Planet V.

[Carolyn McCall, Chief Executive at ITV]

Both continue to demonstrate really strong momentum, viewing and advertising, and we are building on this by focusing on the drivers of content, marketing, distribution and product. We are continually enhancing our offering and leveraging viewing data to power every decision we make. Planet V enables us to deliver high demand, targetable audiences at scale, which significantly improves the monetization of our digital ad inventory. The platform is underpinned by over 40,000,000 ITV registered users, so that's a really massive scale, giving ITV one of The U. K.

[Carolyn McCall, Chief Executive at ITV]

Largest first party data sets. This data is augmented then with third party data to achieve very granular targeting, of which we have over 20,000 options. Through this increasingly sophisticated and valuable ad inventory, we're able to deliver higher value cost per thousand or CPMs, driving growth in our digital ad revenues. The linear ad market is expected to be worth around £4,000,000,000 in 2025. And of course, our position here has always been very strong.

[Carolyn McCall, Chief Executive at ITV]

The online video ad market is estimated to be worth around £9,000,000,000 and has grown very rapidly over the last few years. Our investment in ITVX and PLANET V allows us now to effectively compete for a much wider pool of this £9,000,000,000 online video advertising market. We are attracting advertisers who are new to TV and new to ITV, those that are scaled enough to benefit from TV advertising but until now have not really been able to consider it because of the cost. A key initiative is our SME strategy. We've established a direct sales team for SMEs only who aren't represented by agencies, and we will launch a single advertising market platform in collaboration with Sky, Channel four and Comcast Universal Ads platform, so a very good example of collaboration becoming reality.

[Carolyn McCall, Chief Executive at ITV]

We've also created an outcome planning tool at ITV, enabling brands to effectively measure and optimize their advertising performance, and we're really using generative AI to facilitate the creation of cost effective advertising content to those SMEs that really, really can't afford to do TV production ads. And to further expand our addressable market, ITV Commercial continues to develop, as you would expect, a range of innovations. So ITVX is really now a very strong platform. It broke even two years earlier than expected, and it has already recouped its entire investment. We are now looking at new partners to further grow our reach and inventory.

[Carolyn McCall, Chief Executive at ITV]

And a great example of that is our partnership with YouTube, and it has started really well. ITV has made hundreds more hours of ITV content available to viewers on YouTube, and ITV Commercial sells the advertising around this content. And as a result of that, early days still, but we've seen two to four percentage points of incremental reach for different audience groups. So far, ITV Commercial has partnered with over two fifty brands on this, successfully securing budgets that would not have come to ITV. We've also entered, and you might have read about this, into a first of its kind strategic relationship with Disney plus in The U.

[Carolyn McCall, Chief Executive at ITV]

K, and that went live last week. And it's a great promotional opportunity, cross promotion. It's a sampling opportunity. It allows a selection of ITVX programs to be carried on Disney plus a selection of Disney plus programs available to viewers for free for the first time on ITVX. And in addition, we are expanding our inventory even further by rolling out digital ad insertion and live viewing on ITVX, and we can deliver linear addressable advertising now on UView, Virgin, Freely and EETV with more to come, all opportunities that we haven't had before.

[Carolyn McCall, Chief Executive at ITV]

So all of these initiatives are helping to drive us to achieve at least £750,000,000 of digital revenues in 2026. Now that's underpinned by our focus on developing also non advertising digital revenue partnerships. And good examples of that are Ka Ching and ITV Win, and there will be more to come. Our third strategic pillar, as you know, is optimized broadcast. So a few words on that, too.

[Carolyn McCall, Chief Executive at ITV]

ITV's linear TV channels continue to deliver those large commercial audiences, the largest you will get in The U. K, and they are so valuable to advertisers with our focus on live sport, drama and entertainment, particularly stripped entertainment. And recent research by Ubiquiti demonstrated that TV advertising remains the most effective advertising channel for brands. Because of the significant data we have, our measurement and innovation team internally has developed research and measurement tools to prove the effective outcomes of TV advertising spend. That's a first in our industry, and it's key to maximizing our linear advertising revenue.

[Carolyn McCall, Chief Executive at ITV]

In the last twelve months alone, we've worked with around 100 clients, and I know that many of them really, really find this work valuable. It's very reassuring to know that, that return on investment in TV is the highest of all media. So that's a really important piece of work for us. Now on to a separate subject altogether. You will all know that being a commercial PSB is at the heart of ITV, and that's why we welcomed the publication just this week of Ofcom's review of our sector and its very clear recommendations.

[Carolyn McCall, Chief Executive at ITV]

We've been discussing this with them over time, and it's a really good review. In summary, we are confident in creating value through attractive growth in Studios, fast growing digital revenues and M and E, and that is all underpinned by our strategic cost management. Together, these drive profitable growth, strong cash generation and attractive returns to shareholders. Now I have to say that over the last couple of years actually, we've done a huge amount of heavy lifting to get to this stage of the transformation. And we've said we have transformed already ITV.

[Carolyn McCall, Chief Executive at ITV]

So we're in a very strong position to build on that transformation. And none of that would have been achieved without the support and commitment of every single person across ITV. We've had to make restructuring decisions. We've had to, as you know, make strategic cost decisions, and they've affected people. But every single person at ITV turns up to work in a completely professional way.

[Carolyn McCall, Chief Executive at ITV]

And I just want to say they really embody our unique combination of creativity and commercialism that is absolutely unique to ITV. And even as we celebrate our seventieth birthday this September, I know that all of our people right across ITV are focused on the future. And I just want to thank them for every single thing they've done to make our strategy a success. We're now, of course, very happy to take your questions.

[Operator]

Thank Our first question comes from Adrian de Saint Hilaire of Bank of America. Your line is now open. Please go ahead.

[Adrien de Saint Hilaire, Director at Bank of America]

Thank you very much, Caroline and Chris, for the presentation and taking those questions. I've got a few, if you don't mind. If I kick off with ITV Studios to begin with, could I just clarify something? When you said you're on track to deliver good growth for 2025, does that include the contribution from acquisitions that you've completed in 'twenty four and 2025? And how much does these acquisitions bring in terms of revenue for the full year?

[Adrien de Saint Hilaire, Director at Bank of America]

Because I think the impact in the first half was certainly bigger than I expected. Sticking to Studios, again, on that margin of 13% to 15%, so it implies quite a step up into the second half. I know margins can be volatile depending on the revenue mix. So is it fair to assume that you expect a strong distribution revenue contribution into the second half to get to that level? And then lastly, on your digital advertising I'm sorry, digital revenue target were £26,000,000 of £750,000,000 I think in order to get there, you probably need to accelerate revenue growth next year to something like above 20%.

[Adrien de Saint Hilaire, Director at Bank of America]

Could you just explain to us how you would get there, please? Thank you.

[Carolyn McCall, Chief Executive at ITV]

Take the first two.

[Chris Kennedy, Group COO & CFO at ITV]

Yes. So thanks, Adrian. The on acquisitions, you're right. We've made quite a number of acquisitions over the last six months. We've got Hartswood, Moon Age, Eagle Eye and just yesterday, Plano a Plano.

[Chris Kennedy, Group COO & CFO at ITV]

In the first half, they did make quite a big contribution. I mean, the gentleman being on its own quite an important delivery for us. So those numbers will be the acquisition numbers will be in the full year number, but we're expecting organic growth as well. And we don't give guidance on how much will be in the full year. But I think the thing to say is we're really pleased with the acquisitions we've made and there's some great shows.

[Chris Kennedy, Group COO & CFO at ITV]

We've got Devil's Hour in the second half coming as well. So some really important shows for streamers coming from those new acquisitions. And yes, distribution will be a really important part of the second half margin progression. So we've got a great schedule of deliveries, which drives the revenue growth. And then the in a normal year, last year, if you remember, not normal because we had the knock on effect of the writers' strike in the first half.

[Chris Kennedy, Group COO & CFO at ITV]

In a normal year, catalog is weighted to the second half, that's exactly what will happen this year. And that is a very high margin business.

[Carolyn McCall, Chief Executive at ITV]

So on the digital advertising target, I mean it's a great goal. And we are firstly, I think if you look at the digital advertising market, we're growing ahead of the digital advertising market. We expect that market to continue to grow. So we're up 12% in the first half. You should expect that to continue for us.

[Carolyn McCall, Chief Executive at ITV]

So that's one thing. We've got some other things that we are doing, like YouTube, which we're very pleased about, and you heard me talk about that in the presentation, where that is all incremental money that will go into digital advertising. We're now selling the Disney Rail. We don't expect that to be material, but it all adds up. All of the things we're selling, digital inventory on ITVX for the Disney plus content, for example.

[Carolyn McCall, Chief Executive at ITV]

So these are all kind of new initiatives and innovative things that we're doing that will all add to the digital advertising revenue. I think the SME strategy, which is just I mean we've been working on this for some time, but it's really kicked off in terms of the collaboration with Chanfor and Sky using Comcast universal ad platform to attract SMEs to our digital platforms. And the reason that's really important is they've never really been able to use TV because of the production cost to enter the TV advertising market, the linear TV advertising market. So this gives us the opportunity to get that kind of quite long tail of SMEs who are scaling up but are unable to use TV but really want to come into ITVX, for example. So I think that's an important strategy.

[Carolyn McCall, Chief Executive at ITV]

We've got the collaboration, as I said, but we've also got our own strategy where we're doing we have our own sales team now, so we recruited an SME sales team who will go after that business, and it will be new to TV. So that's also incremental advertising. That's all digital advertising. There are other initiatives like being able to do digital ad insertion in live viewing on ITVX, for example. There's being able to addressable advertising.

[Carolyn McCall, Chief Executive at ITV]

So all of those things are part of the digital advertising part. The second bit of what we're doing, I think, is we now have such a strong platform in ICVX. Many other partners know that. And what we are really working on now is getting more partnerships in because we're using our brand, we're using our IP, we're using our kind of scale, if you like. So we've got the 40,000,000 registered users.

[Carolyn McCall, Chief Executive at ITV]

We do all sorts of marketing and promotion with that data. And so what you Kuching is an example of that. That may work, that may not work. But this is all about non advertising revenue. It's digital revenue, but it's made in a different way.

[Carolyn McCall, Chief Executive at ITV]

ITV Win is a very good example. And we're optimistic about Kuching, by the way. But I mean I think, really, it's just we're having to test and learn in that area. ITV Win Now is a destination platform for competitions and games, and we will increase that as we go forward. And I think at the full year, we'll be able to announce a couple of other quite key partnerships in that area.

[Carolyn McCall, Chief Executive at ITV]

So that will help us bridge to where you were talking about. So we whole area of non advertising but digital revenue is a new area for us that we're pursuing quite vigorously.

[Operator]

The next question comes from Lisa Yang of Goldman Sachs. Lisa, your line is now open. Please go ahead.

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Hi, good morning. Thanks for taking my question. The first one just on the overall advertising environment. It sounds like your Q2 TAR was actually better than what you guided to initially. So I'm just wondering what drove that?

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Is it maybe TV beginning some share? Is it just overall like better macro? So yes, any color by category as well would be helpful. And as a follow-up, just in terms of the guidance for March, you'll be down. Do you mean anywhere between zero, minus one or it's more like low single digit to be more specific?

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

The second question just on your overall content cost, where you managed to reduce it by sort of 1,000,000 What basically enabled you to reduce the sort of cost? Is that because all your competitors are also reducing costs that allows you to basically extract more sort of savings without impacting your viewership? And do you see this as a sort of more normal run rate for your content budget going forward as well? Or is any sort of one off of phasing? And the last question, I'm just curious to hear your thoughts on the impact you think JTBI may have, I think, on your TV working in general?

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Because I guess, on one hand, it could be a risk because digital advertising is made so efficient and it could basically redirect more budgets basically towards digital. But at the same time, you did mention there's an opportunity for IT also directly into maybe SME budget. So I'm just wondering how do you weigh the risk of the opportunities from J and E and the impact it may have on your business?

[Carolyn McCall, Chief Executive at ITV]

Could you I'm so sorry. Could you just repeat your fourth question? Neither of us kind of caught all of it.

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Yes. So the last question is more about the impact of doing TVI in general on basically the TV advertising budget. Do you see risk that you see potentially activity shift away from TV to digital because digital advertising is expected to be made a lot more efficient? Or at the same time, do you see potential actually an opportunity for ITV such as, for instance, as you mentioned, tapping into SMEs because it can lower the cost of content creation and that could enable you to attract more customers. So basically, how do you weigh the weight versus the opportunity, I think, of the impact of Gen AI on your business?

[Carolyn McCall, Chief Executive at ITV]

Okay. All right. Well, look, let me talk about the ad environment, and maybe I'll take the Gen AI question at the same time as the ad environment. They're slightly they're related, not linked. I think that it is we are ahead of our expectations and market expectations on the ad environment.

[Carolyn McCall, Chief Executive at ITV]

I think if I give you some color around the categories, I think it's quite revealing. I mean retail is our biggest category, and it's held up actually very well. It's broadly flat. Now supermarkets within that is down, as you'd expect. But I mean retail, excluding supermarkets, is flat.

[Carolyn McCall, Chief Executive at ITV]

And I think that's very encouraging because they were they've all been very affected by NICs. It's been a huge hit on retail. And yet retailers are still using TV as a medium because they know it's extremely effective at driving traffic, driving product, sales, driving impact for them and actually driving growth. So I think that's a really important thing. We've also seen growth in pharmaceuticals, travel and tourism, entertainment and leisure and telecoms, and that's helped us kind of exceed expectations.

[Carolyn McCall, Chief Executive at ITV]

Because I think what that shows is when I tell you the category is down, the categories that are down really is FMCG, cars, alcohol and gambling. And those are the categories that really shifted a lot of money last year into the first half because of the euros and also into July because the euros spanned June, July. And so you can really see the euros impact on advertising. So I would never say that the advertising market currently is easy because there are a lot of it's not it's less macro it's a bit macro. It's not so much macro.

[Carolyn McCall, Chief Executive at ITV]

I think it's more about The U. K. Economy, and it's perhaps performing as well as the government expected. But certainly, I think that it's not an easy environment. But actually, within that, we're actually we have actually done better because if you think about our H1 advertising revenue against 2023, which was a more normalized year, we're up 2% because we didn't have the euros.

[Carolyn McCall, Chief Executive at ITV]

So last year, the euros for us was a big skew. We expected it. We forecast it. It's in our budgets. And so we but we actually did a bit better than we'd actually set.

[Carolyn McCall, Chief Executive at ITV]

So that's really the story about and there's a lot of self help in there, as you would expect. All the innovations I've talked about, all the initiatives I've talked about in the presentation, those are all things that are giving the commercial team a huge amount of opportunity to go and get other things. Some of them are digital advertising opportunities. Some of them are nondigital partnerships, but they're all the momentum is huge, and there's a lot of self help in there. That's the first thing.

[Carolyn McCall, Chief Executive at ITV]

I think if I take the Gen AI point, look, I think it's Gen AI has been around for quite a long time. And Gen I AI is just really, really it's not really, I don't think, affecting any kind of shift to or from digital. I think that shift has happened years ago when a lot of media departments thought, if I don't use digital, I'm going to get facts, right? Mean because it was a new, new thing years ago. I think actually the pendulum has probably swung back a bit.

[Carolyn McCall, Chief Executive at ITV]

So that's one thing I would say in the broad. I think Gen I is being used internally on a whole load of things in terms of how we kind of improve content, etcetera. That is obviously going to augment the advertising. But it's all things that we would do anyway. I think ITVX, obviously, a digital point of view, gives us a huge opportunity because we weren't able to play in that market at all before.

[Carolyn McCall, Chief Executive at ITV]

And it's really only in the last three years that we've been able to go after that £9,000,000,000 digital advertising revenue pot that I mentioned rather than sticking the £4,000,000,000 broadcast revenue pot for TV. Do you see what I mean? So actually, we see it now. I mean I don't think there are any I don't think it's about a shift from TV to digital. I think that's already happened.

[Carolyn McCall, Chief Executive at ITV]

And I think that we can now offer advertisers a huge kind of proposition in terms of mass reach and target for advertising and creative partnerships and merchandising and product placement and a whole gamut of other things. So we have a very unique proposition, and that really maintains our kind of commercial leadership, I think.

[Chris Kennedy, Group COO & CFO at ITV]

And the thing I'd add is, Lisa, that and that's one of the reasons for doing the outcomes work. As Carolyn said, we've been competing for advertising budgets for a very, very long time. So that's not new. What is new is our ability to really demonstrate the return on investment of TV for advertisers. We've done so many studies now working with advertisers to demonstrate that being on TV not only in itself is a higher returning investment, but it multiplies the benefit and the ROI of all of their other advertising spend.

[Chris Kennedy, Group COO & CFO at ITV]

And the team have done some great work. And so demonstrating, as Karen said, that the pendulum, if anything, is swinging the other way because we can now prove the power of TV Yes. To Absolutely. On Q3, we're really pleased with the first look, but it is a first look. So I'm not going to get drawn on getting any more granular on marginally down other than to say the only reason it's down is because we have the knockout stages of the men's euros in the July, and England went all the way.

[Chris Kennedy, Group COO & CFO at ITV]

So that's why the we've got a tough comp in the beginning of the quarter, but it gets better throughout the quarter.

[Carolyn McCall, Chief Executive at ITV]

Let me take content costs and come in whenever. I think I want to separate that minus £20,000,000 in two things. One is the timing of the voice, which has moved to H1 twenty twenty six. That was a deliberate scheduling decision, which we're very happy about. And then I think you've got a second bucket, which is about us just being very, using data much, much more effectively on viewers and what they like, what they're coming to, how they're coming to it, how they're viewing.

[Carolyn McCall, Chief Executive at ITV]

So we're just much, much more sophisticated about the use of data with content and viewers. And so one of the reasons we were able to close ITVB, launch something called ITV Quiz and actually invest a bit more in ITV2 is because we understood that we wouldn't actually lose viewers. We would lose no revenue by doing that. And actually, what has transpired is that we've doubled our share and actually audience by doing ITV quiz instead of ITV B, and all the viewers from ITV B, as we expected, went to ITV2. So that is an efficiency, but it's also a much better proposition for viewers, much better.

[Carolyn McCall, Chief Executive at ITV]

So that's another example. And then I think the third bucket really is that we're just very, very effective on our windowing strategy. And so we have shifted from doing only exclusive original content on ITVX by doing original content, which we clearly do, but we launch it on both ITVX and ITV. We then drop the box set on ITVX with confidence, knowing because of the data and because of our experience now that they will, all our viewers will not binge that. They still come in weekly.

[Carolyn McCall, Chief Executive at ITV]

And so therefore, the consolidated audience of the two things is higher than if we were to do it in two separate windows. So we are optimizing and really making the most of our content by doing it that way. So it's a much better return on investment. So those are the three ways we've done it to date.

[Chris Kennedy, Group COO & CFO at ITV]

And all driven by the fact that we have one content budget. And so we can move our investment in content, as Carolyn said, across all of the channels that we've got across ITVX and across different demographics. I mean it's interesting that ITV Quiz, we've attracted a new audience there. It skews more male, and that's a very valuable audience for advertisers.

[Carolyn McCall, Chief Executive at ITV]

Yes. And I think your other question on this was, is it a one off? Well, I don't think you should one, I would say that we are also reinvesting money in content. So some of the savings that we make, we will put into content so that we can invest more in live sports, that we can do more drama, for instance, which get more expensive. We can offset inflation.

[Carolyn McCall, Chief Executive at ITV]

So it's a reinvestment as well as actually looking at where we can be more efficient. So it's not a one off. We will continue with that mindset going forward.

[Operator]

The next question SMITH:] comes from Julien Roch of Barclays. Julien, your line is now open. Please go ahead.

[Julien Roch, Managing Director at Barclays]

Yes. Good morning, Karin. Good morning, Chris. Thank you for scheduling your results when there are no other results, so we can leisurely ask questions, which hasn't been the case for a while now. My first question is on 2026.

[Julien Roch, Managing Director at Barclays]

I know it's very early, but on content cost, as you mentioned, the voice, there's also the World Cup, you've mentioned continuing efficiency. So can we have some parameters about content cost next year? And similarly, on exceptional, Chris, you said there'd be far less. That's my first question. The second question is on cash conversion.

[Julien Roch, Managing Director at Barclays]

You said 80% on average, but what about this year? Can we get some pointers and also cash tax because there's the production tax credit? And then the third and last question is on M and A. So I had the joy and privilege of covering your wonderful company since May 2004. The first M and A rumors was October 2004.

[Julien Roch, Managing Director at Barclays]

We had about two years. This year, it's Panigena and Redbird. So 42 rumors later, more seriously, any comment on potential deals as well as your view on maintaining your integrated model?

[Chris Kennedy, Group COO & CFO at ITV]

So

[Chris Kennedy, Group COO & CFO at ITV]

26%, content costs. You're right. We've got the World Cup next year, which will be a great driver of advertising revenue. And typically, in those years, you see content costs. In a big sporting year, they go up slightly.

[Chris Kennedy, Group COO & CFO at ITV]

Going back to what we said about the content spend, I think all of the optimization we can do now based on the data we have and managing it as one content budget means that we can hold it broadly at the current levels and we can drive the viewing we want and the growth we want from that spend. But you should probably expect that content spend next year is a little bit more because of that FIFA World Cup impact. Exceptionals, I mean, you look back over the last few years, this year's exceptionals are very much driven by the earnout or the contingent consideration that's based on employment. And you know the accounting around that, Jean Pierre. So that and we don't anticipate any major acquisitions, but we never know.

[Chris Kennedy, Group COO & CFO at ITV]

And that's why you know that the exceptionals can go up or down. But with those small bolt ons, there might be a little bit of that. But if there is none of that, then you'll just have a few tens of millions of the restructuring costs as we continue the cost saving program driving that. Cash tax. This year, you're probably looking, I think, memory at around £60,000,000 but you're right, it's varying now with the different HETV regime.

[Chris Kennedy, Group COO & CFO at ITV]

And cash conversion this year, it's probably slightly better than where we thought it would be. So I think there's probably a net sort of cash improvement in the forecast. It will be below 80,000,000 but I think it will be a small improvement from where we thought.

[Carolyn McCall, Chief Executive at ITV]

Great. And since you've been covering us since 02/2004, you wouldn't expect me to comment at all on all the speculation that you have heard about over those many years. I mean there's been speculation about ITV for years. So there's we won't comment on any of that. Suffice it to say that in our industry at the moment, everyone is talking to everyone.

[Carolyn McCall, Chief Executive at ITV]

I mean everybody will say that they're just talking because whether that's about partnerships, whether that's about content partnerships, commercial partnerships, Everyone is talking to everyone. So there's nothing further really to be said on that.

[Julien Roch, Managing Director at Barclays]

Well, on the integrated model, how integral is it to your strategic view about iQIYI?

[Carolyn McCall, Chief Executive at ITV]

Yes. Look, we've always said the integrated model works very well for us. And you can see that, I think, in our progress and our development of the strategy. It is definitely beneficial, and you know why. You know that studios can break shows in ITV1.

[Carolyn McCall, Chief Executive at ITV]

ITV1 is the biggest marketing platform in the entire country. And therefore, if a show breaks and does well, it sells right around the world. It doesn't have much trouble doing that. So there are absolute and you know what the benefits are. I mean there's offset on inflation.

[Carolyn McCall, Chief Executive at ITV]

There's all sorts of benefits. So but what we've also said is we're not dogmatic. We're not wedded to any one particular thing. We would always be open to reviewing depending on what the market is doing. I mean I think that our market has shifted so dramatically in the last five to ten years.

[Carolyn McCall, Chief Executive at ITV]

I mean even just if you look at the last five years, there's been just huge shifts in viewing, in advertising, in the business models. So I think we just always have to, as an ex co and therefore as a Board, be very open to anything. And that's what we are. We discuss it. We're strategic.

[Carolyn McCall, Chief Executive at ITV]

And we'll keep we will always keep things strategically under review.

[Operator]

The next question comes from Ed Young of Morgan Stanley. Ed, your line is now open. Please go ahead.

[Ed Young, Equity Research Analyst at Morgan Stanley]

Hello. My first question is on non content savings. It's sort of barely an update that goes by without something additional.

[Ed Young, Equity Research Analyst at Morgan Stanley]

And I appreciate that's a combination of some long term programs, take a long time player and some of it's a reduction in discretionary spend. So could you give a bit of a picture for where you sort of sit in this long term process on the non content cost reductions? The second is on studios. One of your KPIs that trended quite well in the half was around streaming hours sorry, total hours on streaming platforms, just up, think, five points year on year. I appreciate some of that's probably U. S.

[Ed Young, Equity Research Analyst at Morgan Stanley]

Bounce back where your scripted penetration is very high already, but can you talk a bit about the broader trends there to get to your 30% and particularly your traction with unscripted in The U. S. As it stands now? And then third, just wonder if you could give any quick comment on the performance of the women's euros versus your expectations.

[Carolyn McCall, Chief Executive at ITV]

What was the third question?

[Chris Kennedy, Group COO & CFO at ITV]

Women's euros performance versus expectations.

[Carolyn McCall, Chief Executive at ITV]

Yes. Okay.

[Chris Kennedy, Group COO & CFO at ITV]

Shall I kick off on this cost You

[Carolyn McCall, Chief Executive at ITV]

kick off, yes.

[Chris Kennedy, Group COO & CFO at ITV]

Yes. So at the cost program, as you know, it's a multiyear program. We only include, in those savings that we disclose, savings that are permanent. So it wouldn't include any phasing or timing or temporary reduction in spend. It has to be a permanent reduction.

[Chris Kennedy, Group COO & CFO at ITV]

And it is a multiyear program, as you say. We're getting the benefit of some of the actions we took last year. This year, we'll get some of the benefit of the actions we take this year and next year. We're constantly rebuilding that program. There are tens of different initiatives that all ladder up to that one number.

[Chris Kennedy, Group COO & CFO at ITV]

And it's right across the business and everyone is involved. And the reason we've upgraded this time is that the process we go through is anyone can give us an idea for where we might be able to make things more efficient. It goes into what we call the hopper and then we work out is it a good idea or is it a bad idea, what are the risks and so on. And then, put a plan around it. And then, only then when we've got that plan do we say, right, we'll bake that saving in.

[Chris Kennedy, Group COO & CFO at ITV]

So this upgrade is just more of the ideas coming out of the hopper. We've developed a really good plan for them. We know we can deliver them this year and so we've included them in the guidance. So that's the kind of way we run the program.

[Carolyn McCall, Chief Executive at ITV]

On Studios, let me just I'll give you a broad I mean I think the visibility is good, and I think our pipeline is good overall for Studios. Our booked revenue is a similar level to last year. So that also gives us good confidence in the full year. I'd say on the whole market that we are cautiously optimistic. I think we're definitely seeing recovery following the strikes, which kind of paralyzed America for a very long time.

[Carolyn McCall, Chief Executive at ITV]

I think you're right about unscripted. There's strong demand for unscripted in The States. So it's the benefit, I think, for us of having quite a diversified portfolio there because I think scripted recommissions and decisions around shows unscripted are taking longer. And I do think that's the effect of both the strike but also the LA fires, actually. And so we're seeing a kind of just a longer there's just more of a lag than we're used to unscripted, but unscripted is absolutely compensating, I would say, for that.

[Carolyn McCall, Chief Executive at ITV]

We're having I think streamers is a particular standout. We're having really positive conversations with streamers. And I think actually, they're still commissioning premium scripted, but they are doing a lot of unscripted shows with us now. And so that's a big change from where we started with streamers. And that's why our target of 30% coming from streamers, which is a huge diversification because I think five years ago, was something like five or 6% or even less.

[Carolyn McCall, Chief Executive at ITV]

So that's a very big thing. So that's where we are on that. I mean our pipeline, H2, is if you look at the unscripted shows, they're really good. I mean Love Island USA has been an absolutely breakout success. It's been unbelievable over there.

[Carolyn McCall, Chief Executive at ITV]

I mean people you'd never think were watching it are watching it and are e mailing and texting and saying, This is amazing. And actually, what that allows them to do in unscripted is do two spin off shows. So they've got Love Island Games going on with Peacock, and they've also got another program that they've got in the pipeline, which will break soon. So that's coming up. So there's another spin off show of Love Island in The States.

[Carolyn McCall, Chief Executive at ITV]

And I think that's what happens when you have a very successful format, which everyone is talking about. And the euros? What The euros. Oh, yes. So now this is good news, actually.

[Carolyn McCall, Chief Executive at ITV]

So our Director of Sports, very fortunately, picked the semifinals for England. And so we got a massive game on Tuesday nights. I would say that actually the early games probably were below our expectations because we did a huge amount of promotion with the BBC, both of us separately and jointly, did a huge amount of promotions to build this tournament and get huge amounts of awareness for us to get really behind the women's game. And that, I think, has worked, but the early game is probably below what we expected, and the semifinals has been fantastic. So we got 10.2, I think, million at peak.

[Carolyn McCall, Chief Executive at ITV]

It was very exciting. It was really important to us to get to semifinals because all our advertisers wanted that. So we sold it really, really well on that. I would just say, and we are, we will continue obviously to continue to build and help the women's game in any way we can, it is still nowhere near the men's game in terms of rating, right? So if you think about the euros last year in the first half and in July, we would be did £22,000,000 I think, roughly, on The Netherlands game and all the matches.

[Carolyn McCall, Chief Executive at ITV]

So even if it's a Spain Portugal game or a Netherlands Spain game or whatever, you'll get higher audiences than the women's game would get for quite big games. So I think there's, you can't compare the women's euros to the men's yet. Maybe one day, we will be able to do that. So we're very pleased with it, in case I didn't get that. Very pleased.

[Operator]

The next question comes from Adam Berlin of UBS. Adam, your line is now open. Please go ahead.

[Adam Berlin, Executive Director - European Media Equity Research at UBS Group]

Yes. Hi, thanks for taking three questions, if I can. Very interested, Karin, to hear about the strategy around SME advertising. Can you tell us how much of the H1 digital ad revenue was from SMEs already, if anything at all? That's the first question.

[Adam Berlin, Executive Director - European Media Equity Research at UBS Group]

The second question, I know it's early, but any thoughts on Q4 at this stage? I mean you talked today a little bit about the fact that there's no regulatory impact from the change in junk food advertising. There won't be the voice. Just thinking about where the comps are, Any thoughts on how we should be modeling Q4 given what we know today? And then maybe a third question on digital advertising trends.

[Adam Berlin, Executive Director - European Media Equity Research at UBS Group]

I mean 12% is a good number, but it is lower than it was last year. Is that just as it gets bigger, it's hard to sustain the growth rate, so the growth rate will just naturally slow? Or is that something to do with sports, not having the euros? Did that impact digital ad revenue in H1? Just any comments on why you think that growth rate is slowing would be helpful.

[Carolyn McCall, Chief Executive at ITV]

Okay.

[Carolyn McCall, Chief Executive at ITV]

I mean I don't think there's any as far as I know, there won't be any there's no specific SME revenue in H1, I would say. Tiny.

[Chris Kennedy, Group COO & CFO at ITV]

It's small. I mean maybe one stat that would help you is we've got 500 vodder only advertisers, so people who have don't advertise on linear with us. Now a lot of those will be larger brands and premium brands who don't need mass reach but want highly targeted audiences, but there will be some SMEs in there. But the opportunity, I think, is in front of us.

[Carolyn McCall, Chief Executive at ITV]

Yes, I agree. I think it's mainly when we start the collaboration with Sky and Channel four, that will give a big boost. And then they've we've formed the sales team in the half. So they're just getting they're up and running. But as Chris says, I think more is to come. Do you want to talk about Q4?

[Chris Kennedy, Group COO & CFO at ITV]

Early to early. Think about mean the comparators in Q4 last year, year on year, it was quite a weak quarter, but we don't have a view in Q4, as you know, and it's too early to talk about it.

[Carolyn McCall, Chief Executive at ITV]

Think on digital advertising trends, it's quite hard. It's a hard one. I think we would be confident that we would see growth in digital advertising. And we would be disappointed if it wasn't double digit growth, right, because I think it is still a growth market. It's less sensitive to The UK economy, but it's not completely insensitive to The UK economy, okay?

[Carolyn McCall, Chief Executive at ITV]

So if advertisers are profit protecting because they don't know what's to come in the second half in terms of budget or whatever, tax, whatever, then I think they are they take they go across the line, and they will take money off everything, not just advertising, but they take money off everything. And it will include digital and it will include linear. Do you see what I mean? It will include production It will include manufacturing costs. They will look everywhere.

[Carolyn McCall, Chief Executive at ITV]

So I do think you're right that the digital appetite look, we've outperformed markets in the first half. That's a key indicator for us that, as a commercial leader, we should be outperforming wherever we can because then we're controlling what we can control. I don't know. I mean I just feel I would say it is continuing. It will continue to be a growth market Yes. For some time to

[Chris Kennedy, Group COO & CFO at ITV]

I mean I would say, Adam, we always said Planet V was, which is, as you know, evolving all the time and we're introducing more ad products. But we said we would do it first on demand viewing on ITVX and that's what's driven all of the growth up to this year. And as Carolyn said in her presentation, we're now sort of on the next leg of driving demand and opening up inventory. So we've got to drive demand, we've got the SME initiative. To drive inventory, we're on YouTube now, which has been really successful.

[Chris Kennedy, Group COO & CFO at ITV]

It gives us extra reach. We've got, I think, two fifty advertisers on YouTube that wouldn't have come to ITV if we hadn't been on YouTube. And it is a different audience and it's not cannibalizing to any great extent. We now conserve targeted advertising into live viewing on iTVX. So that's a whole new set of inventory.

[Chris Kennedy, Group COO & CFO at ITV]

And we can serve it into live viewing on other platforms like Freely and like Virgin. There'll be others added. By the end of this year, around 12% of households watching live in The U. K. Will be able to serve a targeted ad into the live stream.

[Chris Kennedy, Group COO & CFO at ITV]

So we're opening up the inventory. We're driving demand. And I think that's how we will maintain the momentum we've delivered today. And if you think about where we've come from, from the launch of ITVX, it's been phenomenal growth. And as Carolyn said, I mean we've outperformed the digital market in general in terms of our view.

[Chris Kennedy, Group COO & CFO at ITV]

And I won't bore you with the stats, but you look at where we were in broadcast of VOD. Our share of broadcast of VOD when we were on ITV Hub was less than Channel four. Now we are more than we're over indexing compared to our share of the linear market now. That's a very long way to come in a very short space of time.

[Adam Berlin, Executive Director - European Media Equity Research at UBS Group]

Great. Thank you very much, Steve.

[Operator]

The final question comes from Nizla Nayzal of Deutsche Bank. Your line is now open. Please go ahead.

[Nizla Naizer, Director at Deutsche Bank]

Great. Thank you. Good morning. I have two small follow ups on the SME opportunity. I'd like to know, have you quantified the market size of the SME opportunity out there that you could potentially go after with the new initiative?

[Nizla Naizer, Director at Deutsche Bank]

And secondly, you mentioned that you have invested in a sales force, but eventually, is the SME revenue stream more profitable than the largest sort of national level advertisers? How should we think about the profitability aspect of that stream going forward? Some incremental color would be great. Thank you very much.

[Chris Kennedy, Group COO & CFO at ITV]

So on is it more profitable? We're selling it at the same we will be selling it at the same price as we are selling targeted advertising generally, which as you know for now is a fixed fee. And then you can pay to add extra targeting opportunities like mixing your customer data with Boots or a Tesco to do a really targeted campaign.

[Carolyn McCall, Chief Executive at ITV]

The more granular you get, the more you pay.

[Chris Kennedy, Group COO & CFO at ITV]

Yes, exactly. So it's the same level of profit. And in terms of the opportunity, maybe I start. Mean, as Karen said, there's a £9,000,000,000 audiovisual market now. There's an awful lot of small advertisers there, but there's a we call it the fat end of the long tail.

[Chris Kennedy, Group COO & CFO at ITV]

It's brands who are big enough where TV and targeted TV will make a massive difference to them, But they've never thought about doing it before. So it's about removing the barriers to entry like the cost of the creative. But also then, I and we can do that ourselves for brands who would buy through an agency. I think the SME initiative is really exciting because it's for those brands who want to self serve. They've grown up just self serving with digital advertising. And how I don't far we can go.

[Carolyn McCall, Chief Executive at ITV]

And I don't know if we made that clear. That sales force is only doing direct client sales, and they're only doing direct to SME client sales. So those are the clients that don't use an agency at all. So there's an opportunity there. And also, we will use Gen AI there actually to help them create ads because the quality of the ads does not have to be like TV ad.

[Carolyn McCall, Chief Executive at ITV]

So there's opportunity there. So we have our So we have our own creative studio in commercial, which does make advertising of all sorts, but they will be very focused on how we get to be able to make the advertising cost effectively to be able to get them onto ICBX quickly.

[Operator]

We have no further questions. So I would like to hand back to Carolyn for any final or closing remarks.

[Carolyn McCall, Chief Executive at ITV]

Just want to say from both of us that we know it's a hugely busy day out there, so thank you very much for joining us and for your questions. See you all soon. Bye. Hi.

Participants

Executives

• Carolyn McCall, Chief Executive
• Chris Kennedy, Group COO & CFO

Analysts

• Adrien de Saint Hilaire, Director at Bank of America
• Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs
• Julien Roch, Managing Director at Barclays
• Ed Young, Equity Research Analyst at Morgan Stanley
• Adam Berlin, Executive Director - European Media Equity Research at UBS Group
• Nizla Naizer, Director at Deutsche Bank