ITV today ditched its dividend and outlook for the year as the coronavirus outbreak continues to decimate advertising revenue.
The broadcaster said it would no longer propose a 5.4p per share dividend for 2019 at its upcoming annual general meeting, nor its 8p full-year payout for 2020.
ITV said its decision to scrap the dividend — alongside further cost and capital expenditure cuts — would save the company more than £300m.
It comes amid a deepening impact of the pandemic on the public service broadcaster’s advertising revenue.
The firm previously warned that the outbreak would lead to a decline in advertising from travel brands, but said it had now suffered deferrals from companies across all sectors.
As a result, ITV said it could not give guidance for March or April and said it was withdrawing its forecasts for the full year.
ITV this week attracted a record 9.5m viewers to Ant and Dec’s Saturday Night Takeaway. But as advertisers cut their budgets, the broadcaster has been unable to turn larger audiences into revenue.
Over the full year, each one per cent decline in advertising revenue equates to a reduction in revenue and profit of roughly £17m, the company said.
Shares in ITV dropped more than 10 per cent following the update.
Aside from advertising, the coronavirus crisis has also taken its toll on ITV’s ability to continue TV and film productions following government advice on social distancing.
The firm has been forced to halt filming on soap opera favourites Coronation Street and Emmerdale, while Lorraine and Loose Women have also been taken off air from today.
However, the broadcaster said ITV Studios — its production arm — would benefit from increased global demand for content from its library of shows.
Further cost-saving measures will include a reduction in ITV’s programme budget by at least £100m — half of which comes from the cancellation of Euro 2020.
“We are operating in unprecedented and uncertain times, requiring us to take difficult decisions, plan carefully and act with speed,” said chief executive Carolyn McCall.
“We are actively taking measures to reduce costs and manage our cash flow so that we are best positioned to continue to deliver our strategy of building a digitally led media and entertainment company over the medium term.”
Russ Mould, investment director at AJ Bell, said ITV was being “hit from multiple directions”, but said the suspension of its dividend was “the right thing to do”.
“[ITV is] lucky in a way to have a rich library of existing content. The nation will probably be happy to watch reruns of classic TV shows or sporting events,” he added.
“Its broadcasting business can therefore keep functioning, which is more than can be said of many other companies.”
Main image credit: ITV