ITV Studios has reported a 16% drop in revenue in the first three months of the year, despite seeing a strong performance in its streaming platform, ITVX.

The broadcaster said that this revenue drop at ITV Studios reflected the phasing of deliveries and the expected impact of the US writers’ and actors’ strike.

However, it said that this delivery was weighted towards a "strong pipeline of programmes" in H2, meaning that revenue for the 2024 financial year is expected to be broadly flat.

ITVX saw a growth rate of 16% in streaming hours across the quarter, while digital advertising revenue also witnessed growth of 14%.

The broadcaster also reported a 3% increase in advertising revenue in Q1, although this is expected to jump by as much as 12% in the second quarter, as a result of the Euros football tournament starting in June.

Chief executive officer at ITV, Carolyn McCall, said: "Over the full year we expect ITV Studios revenues to be broadly flat. We have a strong pipeline of programmes, good demand for our quality content as we increasingly diversify our customer base towards streamers and the phasing of deliveries is heavily weighted to the second half of the year, including Hells Kitchen US, The Better Sister, A.C.A.B, Showtrial and Ludwig.

"ITVX continued to build on its strong first year and delivered double-digit growth in both digital viewing and digital advertising revenues in Q1 and we expect continued strong growth in both throughout the year.

"Total advertising revenue grew 3% in Q1, in line with guidance, with good momentum continuing into Q2 benefitting from the Euros in June. H1 total advertising revenue is expected to be up around 8%."

The independent broadcaster went on to state that it is on track to deliver £40m in savings in 2024, which is made up of £10m from its 2019-2025 cost savings programme and £30m of additional in-year savings as part of its strategic restructuring programme, announced in its 2023 full-year results.

ITV Studios remains on track to deliver an average 5% growth in organic revenue per annum between 2021 and 2026, and ITV said that it is confident that it will grow its market share in this time.

Investment director at AJ Bell, Russ Mould, added: "Facing a structural decline in traditional TV viewership and advertising, ITV is diversified in two areas. One of these – streaming and digital advertising – contributed strongly to its first-quarter performance, but the other – the ITV Studios production arm – detracted.

"Given this was largely thanks to an event which was completely outside of ITV’s control – the long-running US writers’ strike which eventually concluded last autumn – it is understandable that it is being given the benefit of the doubt by investors. That might change if the promised recovery in the second half of the year doesn’t come through.

"The company’s digital strategy looks to be delivering. ITVX got a negative reception when it was first announced a little over two years ago but the platform is attracting users and advertising at an impressive rate, helping to make up for declining traditional ads.

"It’s a long road back for ITV to the share price highs achieved in the mid-2010s, after a previous turnaround under Adam Crozier, but there is evidence of genuine progress."

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