Coronavirus Rattles Fragile Media Sector

ITV, Britain’s main commercial TV broadcaster and production group has sent 800 staff – 15% of its workforce on leave as ad revenue tanks in the wake of lockdowns and social distancing rules designed to slow the spread of COVID-19 and bring it under control.

ITV revealed a 42% plunge in ad revenues in the March quarter so its no wonder trimming staff numbers and cutting other costs.

In a trading update on Wednesday, ITV said 800 staff have been placed on the government’s job retention scheme, the majority of whom worked at its production arm, ITV Studios (which has a large presence in Australia)

ITV said more staff are being furloughed in other territories – presumably in the US where it is a top 5 producer of TV content.

The company said its total revenue dropped 7% to £694 million ($US872 million) in the first three months of the year, with ITV Studios’ turnover falling 11% to £342 million and advertising income down 2% to £426 million.

ITV said its ad revenue plummeted 42% in April at the height of the pandemic, which mirrors the declines seen at its rival Channel 4 which has slashed costs and staff numbers as well.

ITV said it plans to make £60 million of savings in 2020, double what it previously forecast.

The broadcaster is also cutting £100 million out of its content budget, with the lack of big sporting events such as the Euro 2020 soccer tournament producing natural savings. Non-critical spending projects will be paused, while pay and hiring freezes have been put in place.

ITV has already canceled production in its summer (UK) rating giant, Love Island because of the social distancing rules.

In Australia NSW regional TV group and Seven Network affiliate, Prime Media Group revealed its April revenue slumped by $6 million or more than 38%. That, in turn, has seen a 12.7% slide in revenue for the 10 months to the end of April.

And Nine Entertainment also said on Tuesday that its free to air TV revenue fell 29.8% in April (with 9% of the fall due to the lack of NRL Rugby League games). Nine told a Macquarie investment conference that “May (revenue) looks likely to be down on April”.

Nine also said its TV costs were down 7% so far in 2019-20 and it is looking for a 19% drop in the June half, excluding NRL costs. Radio revenue (through Macquarie) fell 12.4% in the March quarter, while costs are down 6%.

In the US Disney is suspending its half-year dividend to reduce cash flow after revealing in its March quarter earnings release that global measures to contain the coronavirus pandemic had cut profits by $US1.4 billion, mostly from its shuttered theme parks.

Disney said it will not pay a dividend for the first half of the fiscal year, which will preserve $US1.6 billion in cash assuming it had kept the dividend constant at 88 cents a share.

Bob Chapek, who became Disney’s CEO in February just as the virus pandemic was spreading around the globe, said Disney would reopen the Shanghai park on May 11, but with reduced numbers to try and get revenues and cash flow going again.

But the statement and results briefing from executives did not reveal when Disney’s other parks in Asia, the United States, and France would re-open, or when the company’s range of idled businesses including TV and film production, retail stores and cruise ships would return.

Disney’s net income from continuing operations dropped 91% to $US475 million, a sign of the pain the entertainment giant is feeling.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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