ITV has released its first-quarter 2026 financial report, showing a mixed performance across its divisions. While ITV Studios experienced a revenue increase, the Media & Entertainment (M&E) segment saw a slight decline in revenue, accompanied by a modest drop in overall advertising income. Concurrently, the broadcasting giant confirmed it is still engaged in discussions with Sky regarding a potential divestiture of its M&E operations.
During the initial three months of 2026, ITV's production arm, ITV Studios, achieved a notable 4% growth in its revenue. This positive performance was predominantly fueled by an 8% surge in external revenue, largely attributed to the strategic timing of content deliveries to major global streaming platforms. Key productions contributing to this growth included "Skyscraper Live" for Netflix, the second season of "Rivals" for Disney+, and "Love Island U.S.: Beyond the Villa" season 2 for Peacock. However, internal revenue for ITV Studios experienced a 7% decrease, which was an anticipated outcome following adjustments in scheduling and production of soaps and daytime programming.
In contrast, the Media & Entertainment division, encompassing ITV's commercial free-to-air channels in the UK and its streaming service ITVX, reported a 2% dip in revenue. Total advertising revenue (TAR) also decreased by 1.5%. Despite this, digital revenue within the M&E segment showed a robust 12% growth, effectively mitigating some of the losses from linear advertising. Digital advertising revenue, in particular, expanded by 14%, bolstered by a strong start for ITVX, which saw total streaming hours climb by 13%. Popular content like the drama "Gone," "Love Island: All Stars," and the Six Nations rugby championship were significant drivers for ITVX's success. Non-advertising revenue for M&E declined by 8%, aligning with the company's projections.
Looking ahead, ITV anticipates a rebound in total advertising revenue, forecasting an approximate 10% increase in the second quarter, with a particularly strong July driven by heightened advertiser demand surrounding the men's World Cup. The company remains committed to its full-year guidance, expecting continued strong revenue growth from ITV Studios and profitable digital revenue expansion within its M&E business, despite ongoing geopolitical uncertainties. The potential sale of the M&E business to Sky, first announced in November 2025, continues to be an active discussion point, with further updates expected in due course. Should the deal materialize, ITV Studios would transition into an independent entity.
ITV's strategic focus on expanding ITV Studios and enhancing its digital media and entertainment offerings is yielding tangible and favorable outcomes, underscoring the company's commitment to adapting to the evolving media landscape.