Brexit has proven to be the biggest looming cloud over the well being of businesses in the United Kingdom, and in a new development, British television network ITV has reported that its income from advertising sales has taken a hit since companies have slashed their marketing budgets. The company has provided a forecast of his advertising sales earnings and projected a drop of 3% to 4% in ad revenue in the first four months of 2019. As everyone knows, advertising revenues are the lifeblood of most television networks, and ITV is no exception. Following the publication of this forecast, the ITV stock declined and went down by as much as 2.2% at the London Stock Exchange.
Carolyn McGall, the Chief Executive Officer of ITV spoke about the developments on Bloomberg TV and pointed out that most companies are now looking for different ways to offset the rising costs of their business following Brexit. As a consequence, their allocation of marketing costs has gone down as they scramble to protect their bottom line. McGall also spoke about the possibility of a chaotic ‘no deal’ Brexit, and that has also proven to be a factor behind businesses cutting their marketing costs.
Since a deal with the European Union has still not been agreed, companies are naturally tightening their belts a bit. She said, “Most people in Britain in business thought there would be a withdrawal agreement by now. I’m afraid companies have to look at their bottom line and be more cautious and that is exactly what is happening between January and April this year.”
However, it is important to point out that the decline in advertising revenues is not only down due to lower spending from businesses in the UK. The availability of online streaming websites has eaten into ITV’s market share and the onset of Brexit at a time when the network was planning the launch of its own streaming service has come as a bit of a blow. Hence, the network will lose even more advertising revenue as Netflix and Amazon’s Prime Video keep attracting new customers in 2019. The streaming service has been one of the biggest projects during McGall’s tenure, and the chief executive is determined to create new revenue sources for the network in a rapidly changing world. In addition to the streaming service, the company is spending heavily on original programming as well and in a more stable economic environment that may have paid off handsomely.