By Paul Sandle
LONDON (Reuters) -Britain's ITV (LON:ITV) said on Thursday that advertisers were keeping a tight grip on spending, although growing optimistic the downturn would be shorter and shallower than forecast.
ITV's ad revenue was expected to be down 11% in January to March, Britain's biggest commercial free-to-air broadcaster said after reporting a 12% fall in adjusted profit for 2022, reflecting its investment in its new ITVX streaming service.
Chief Executive Carolyn McCall said ITV, which has a Studios production arm as well as its linear channels, delivered robust results in a year of strategic progress, including the "major digital milestone" of launching ITVX in December.
McCall said advertisers were protecting their profits by being "very, very tight" on costs. "However, they will also talk to us about the improving macro economic indicators that have been emerging most recently, and there's a growing business optimism," she told reporters.
Airlines and travel companies were very "buoyed up", reflecting surging demand for getaways, she said, while the auto, telecoms and entertainment sectors were also positive.
Citi analysts said the first-quarter advertising outlook was "mildly worse" than consensus of -9% and would weigh on sentiment, but it was "not that significant in the big picture".
ITV is investing in ITVX to deliver the digital audiences advertisers want in addition to the mass reach provided by shows like "I'm a Celebrity .. Get Me Out of Here" and the World Cup.
Digital advertising rose 17% in 2022, helping limit a fall in total advertising revenue to 1% - at the top end of its forecast - on the record level achieved in 2021.
ITV's shares fell a year ago when it announced a bigger-than-expected 160 million pound programming budget for ITVX.
The stock, which has risen from a two-year low in September, helped by reports about potential interest in its Studios production business, fell 2.8% on Thursday morning.
ITV expects Studios revenue to grow by at least 5% each year to 2026, but said inflation in TV production costs would keep its margin at the lower end of its 13% to 15% guidance.
ITV reported adjusted earnings before interest, tax and amortisation of 717 million pounds ($859 million) on total external revenue up 8% to 3.73 billion pounds.
($1 = 0.8349 pounds)