### ITV plc Annual Report and Accounts for the year ended 31 December 2022 ## Strategic ## EXECUTION ITV plc Annual Report and Accounts for the year ended 31 December 2022 ## We are More Than TV ## We entertain ## and connect ## with millions ## of people globally, ## reflecting ## and shaping ## culture with ## brilliant ## content and ## creativity. ## Key financial highlights Contents 1 | Group external revenue | Statutory EPS | Strategic Report | Further reading | | --- | --- | --- | --- | | £3,728m | 10.7p | 2022 | | | +8% (2021: £3,453m) | +14% (2021: 9.4p) | Highlights 2 | | ITV at a Glance 4 Adjusted EPS Dividend Chairman’s Statement 6 ## 13.2p 5.0p Chief Executive’s Social Purpose ## ‑14% (2021: 15.3p) +52% (2021: 3.3p) Report 8 Impact Report Read more about our Investor Proposition 14 2 3 Social Purpose Impact Group adjusted EBITA Net debt Market Review 16 reporting here Our Strategy 20 ## £717m £623m www.itvplc.com/ Our Business Model 22 Key Performance socialpurpose/ ## ‑12% (2021: £813m) (2021: £414m) Indicators (KPIs) 24 3 Statutory operating profit Leverage ## Operating ## £519m 0.8x and Financial ## 0% (2021: £519m) (2021: 0.5x) Performance ## Review 28 Notes Pay Gap Report Social Purpose 44 Alternative Performance Measures Strategic Report Read more about our Our People 54 (APMs) The Strategic Report explains in detail how PayGap reporting here Alternative Performance Weuse both statutory and adjusted we have performed this year and sets out, Measures 57 www.itvplc.com/ amongst other things, afair review of the measures in our Strategic Report. business, a balanced and comprehensive investors/governance ## The latter, in management’s view, Finance analysis of our performance, the use ofkey reflects the underlying performance performance indicators to explain the ## of the business and provides a more Review 60 progress wehave made, a description of meaningful comparison of how the the principal risks and uncertainties facing Our Commitment to business is managed and measured theCompany, and an indication Section 172(1) 66 day‑to‑day. A full reconciliation ofpotential future developments. Non‑Financial between our statutory and adjusted The Strategic Report is prepared in line andSustainability results is provided inour Alternative with the relevant provisions of the InformationStatement 69 Performance Measures section Companies Act 2006 and the Company Risks and Uncertainties 71 from page 57. Our KPIs (which are has had regard to the guidance issued Task Force on Climate‑related based on adjusted metrics) are set by the Financial Reporting Council. It is intended toprovide shareholders and Financial Disclosures out from page 24. other stakeholders with abetter (TCFD) 85 understanding of the Company, of its 1. The Strategic Report also refers position in the markets within which to total revenue, which includes itoperates, and of its prospects. In ### all ITV revenue, both internal and Governance setting out the Company’s main risks and external. Chairman’s Governance uncertainties and throughout, thisreport | 2. EBITA before exceptional items | | and accounts contains statements that | Statement 96 | | --- | --- | --- | --- | | | has been adjusted to reflect | are based on knowledge and information | Board of Directors 98 | | | the inclusion of production tax | available at the date of preparation of the | Management Board 100 | Strategic Report, and what arebelieved to credits (‘adjusted EBITA’). Corporate Governance 102 be reasonable judgements, and therefore 3. Net debt includes IFRS 16 lease Nominations cannot be considered asindications of liabilities. Leverage is net debt Committee Report 122 likelihood or certainty. to adjusted EBITDA. Audit and Risk A wide range of factors may cause the Committee Report 125 actual outcomes and results to differ Remuneration materially from those contained within, or implied by, the various forward‑looking Committee Report 137 statements in this Annual Report and Directors’ Report 158 Accounts. None of these statements should be construed as aprofit forecast. ### Financial Statements Financial Statements 163 Independent Auditor’s Corporate website Report 164 We maintain a corporate website at Primary Statements 172 www.itvplc.com containing our ITV plc Company Financial financial results and a wide range Statements 245 ofinformation of interest to all Subsidiary undertakings stakeholders, including institutional andinvestments 255 and private investors. ### Additional Information Glossary 259 ITV plc Annual Report and Accounts 2022 1 STRATEGIC REPORT 2022 HIGHLIGHTS ## 2022 ## HIGHLIGHTS ## January ## Snowpiercer Season 3 of Snowpiercer, a post‑apocalyptic dystopian thriller, is released on TNT in the US and Netflix outside the US and China. Production of the fourth and final season completed at the end of 2022 ## Premiership Rugby ITV announces a new partnership with Premiership Rugby to show live Gallagher Premiership Rugby matches and a weekly highlights programme ## February April June ## The Concert for Ukraine Love Island Broadcast on ITV, the televised concert raised The eighth series of the dating show was ITV’s ## Masked more than £13.4million for the humanitarian most‑streamed title of 2022 with over 270million appeal in Ukraine streams across the series. Love Island has now ## Singer travelled to 26territories internationally The final was watched by 7.5million viewers | witha peak audience | | Soccer Aid | | --- | --- | --- | | of 8.8million viewers, | May | Soccer Aid for UNICEF 2022 broke previous | | anda16‑34 audience | | records, raising an incredible £15.7million to help | | of over a million | | children all over the world. The match had a peak | ## The BAFTAs of 4.3million viewers ITV secures more award wins than any other channel or streamer at the BAFTAs, with a total ofseven awards for some of ITV and TV’s biggest and most popular shows – all produced by ITVStudioslabels. These included The Chase, ## March Ant and Dec’s Saturday Night Takeaway and Coronation Street ## £80m Diversity ## Commissioning Fund ITV announces its intention to reserve £80million of its content commissioning budget over the next three years to drive change towards racial equity and disability equity ## carwow ITV announces its investment in Europe’s biggest new car marketplace, carwow, as part of its Media for Equity programme 2 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT 2022 HIGHLIGHTS ## July ## Plimsoll Productions ITV acquires Plimsoll Productions, the largest independent producer of natural history programmes in the world. The producer is behind series including Tiny World and Giant World for Apple+, Hostile Planet for Disney andNight on Earth for Netflix | August | November | | --- | --- | | Big Brother | Record viewing | | ITV announce that Big Brother, the global | ITV1 records its highest weekly viewing share | | television phenomenon, will make its much | in20years, with a 44% share of commercial | | anticipated return to UK television on ITV2 | broadcast viewing across the last week of | | andITVX in 2023 | November, with ITV1’s coverage of | EnglandvUSAin the FIFA World Cup and the finalof I’m A Celebrity...Get Me Out Of Here! | October | December | | --- | --- | | Emmerdale turns 50 | ITVX | | Emmerdale celebrates its 50th birthday. It is | ITVX, ITV’s new, free, ad‑funded streaming | | theUK’s second largest Soap, after Coronation | platform, launches with new and exclusive | | Street, delivering average audiencesof 4.6million | shows,such as Litvinenko; natural history series, | | per episode | AYearon Planet Earth; and teen drama, | TellMeEverything; all produced by ITV Studios | | My Mom, Your Dad | labels. Streams for ITVX launch week were up | | --- | --- | --- | | | New reality dating format, My Mom, Your Dad, | 138% (compared to ITV streaming platforms at | | September | iscommissioned in the UK, Australia and Sweden. | the same time in the prior year) | Together with seven other existing territories, ## thisbrings the total number of commissions FIFA World Cup ## Hell’s Kitchen ofthe format to ten in its first year The England v France FIFA World Cup match Season 21 of Hell’s Kitchen USA, the reality attracts a peak of 23million viewers, making it cooking series, premieres on Fox. Hell’sKitchen ## Fresh Cuts themost watched programme of the year on has travelled to 25 territories to date ITV launches Fresh Cuts series for Black History anychannel and delivering ITV’s best Saturday Month 2022, with five up‑and‑coming Black night on record filmmakers creating films for the strand ITV plc Annual Report and Accounts 2022 3 STRATEGIC REPORT ITV AT A GLANCE ## ITV at a Glance | ITV is a vertically integrated | we distribute content across | I’m A Celebrity...Get Me Out of Here! | | --- | --- | --- | | producer broadcaster and | our ad‑funded linear channels | returned to the Australian jungle in 2022, | | streamer, consisting of ITV | and ITVX, our new free | achieving the biggest audience for the final | | Studios and Media & | ad‑supported streaming | since 2018, with over 12million viewers | | Entertainment (M&E). ITV | platform. The integration of | | | Studios is a diversified global | these two businesses has many | | | production business which | advantages, including providing | | | creates, owns and distributes | a base of core commissions for | | | high‑quality scripted and | ITV Studios, being an attractive | | | unscripted content for | destination for talent and | | | broadcasters and platform | offering advertisers a unique | | | owners in the UK and | opportunity to integrate their | | | internationally. Through M&E, | brand into our shows. | | ## ITV ## Studios | One of the biggest | We have built significant scale | ITV Studios UK | ITV Studios | | --- | --- | --- | --- | | | globally; we are one of the | ITV Studios UK is the largest | | | global creators, | | | International | | | biggest independent producers | producer in the UK. We have | | | producers and | | | ITV Studios also operates in the | | | of TV and streaming content in | 29 labels and create and | | Netherlands, Germany, France, ### distributors in the world and have a production produce programming across a Italy, Spain, Israel, theNordics ### theworld presence in six out of the top diverse range of genres, for ITV and Australia, producing ten largest TV content markets. channels and ITVX, and other scripted and unscripted ### 60% of ITV Studios We create, produce, and UK public service broadcasters content for local broadcasters | | distribute a broad range of | (PSBs), including the BBC, | | | --- | --- | --- | --- | | total revenue and 84% | | | and streaming platforms. | | | programmes, including drama, | Channel 4, Channel 5, along with | | | of ITV Studios | | | Thisis either locally created | | | entertainment and factual. | global streaming platforms. | | content, or formats that have ### external revenue is Ourcustomer base is diverse, been created elsewhere by ITV, ### from outside the UK producing for international ### ITV Studios US primarily in the UK, the television broadcasters and ITV Studios US creates and Netherlands and in Israel. global streaming platforms. produces content for all the ## >60 labels ### major networks, cable channels Global formats across 13 countries ITV Studios creates and and streaming platforms ### and distribution supplying over produces content across across the US. Thebusiness Global formats focus on the 1,000customers 13countries, while our global has two divisions: ITVAmerica, sale and exploitation of formats and distribution which develops and produces unscripted formats business sells, commercialises unscripted content and has a internationally and ITV is ## 285+ and distributes over portfolio ofsuccessful formats oneof the largest format 285unique formats and over and returning series; and ITV distributors worldwide. ## unique 90,000 hours of finished Studios America, which Italsogenerates revenue programmes worldwide. produces high‑end scripted fromlicensing our brands ## formats programming with the forgames, live events and across our format potential to travel and build merchandise. The distribution catalogues international appeal. business focuses on the international distribution of ITV Studios scripted and unscripted ## 90,000+ content and third‑party content to broadcasters and ## hours platforms internationally. of active content in Within this business, we also ourcatalogue finance ITV and third‑parties productions to acquire global distribution rights. 4 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT ITV AT A GLANCE * ### ITV total revenue ITV Group adjusted EBITA ITV Studios M&E digital revenues ITV Studios M&E ## £2,096m £411m £259m £464m ** (2021: £1,760m) (2021: £347m) (2021: £213m ) (2021: £598m) M&E non‑digital M&E other revenues * A full reconciliation between our adjusted and Litvinenko launched on ITVX in | advertising revenues | | | statutory numbers is included in our APMs on | | | --- | --- | --- | --- | --- | | | | | page 57 | December2022. It is based on the true | | | | ** This figure has been restated. Please see section | | story ofthe poisoning of Russian spy, | | £1,588m | £250m | | | | | | | | 2.1 of the Financial Statements for further detail | AlexanderLitvinenko | | (2021: £1,664m) | (2021: £271m) | | | | ## Media & ## Entertainment ### Media & Entertainment (M&E) ITVX has launched and will Broadcast ## 1,139m is the home of ITV’s family of continue to launch at least one Broadcast is the home of our | total streaming hours | channels and platforms – the | new and exclusive show every | linear channels and continues | | --- | --- | --- | --- | | (2021: 1,048m) | largest family of free‑to‑air | week, including dramas such | to deliver ITV’s USP of mass | | | commercial channels in the UK, | asLove and Death, comedy | simultaneous reach and live | | | It is made up of two parts– | such as Changing Ends and | unmissable content. | | 10.5m | Streaming and Broadcast. | documentaries such as | | | monthly active users (MAUs) | | BorisBecker: Game Set and | ITV’s family of channels are | | (2021:9.9m) | Streaming | Match. ITVX has one of the | advertiser‑funded and consist | | | ITVX, our new, free, ad‑funded | UK’slargest free film libraries | of ITV1, ITV2, ITV3, ITV4, ITVBe, | | | streaming platform launched | with over 250 titles and over | and CITV. ITV1 offers unique | | 33.8% | in Q4 2022 and supercharges | 200 series available at launch, | audience scale and simultaneous | | | our streaming proposition. | as well as 20 FAST (free | reach to television advertisers, | share of commercial viewing ad‑supported TV) channels whilst our other channels offer for the ITV Family ITVX combines ITV Hub, ITV andITV’s six linear channels. more targeted demographics. (2021: 33.1%) Hub+ and BritBox UK into an These revenue streams enable integrated free, ad‑funded As well as the free content our investment in high‑quality platform, with a compelling available on ITVX, ITVX’s programming across a range subscription‑funded, ad‑free premium subscription tier offers ofgenres, which underpins the premium tier. It will significantly access to exclusive BritBox UK success of both Broadcast strengthen our offering to content – the largest collection andStreaming. viewers – making it a of British box sets – all ad‑free. destination rather than a catch up service and offers We also generate revenue advertisers targeted audiences through in‑programme at scale through Planet V. competitions and voting Planet V, our scaled through ITV Win, our digital programmatic addressable competitions platform. advertising platform, is theUK’ssecond‑largest In addition to BritBox UK, ITV programmatic video has a subscription streaming advertisingplatform, joint venture with the BBC, afterGoogle. BritBox International. This is available in the US, Canada, Australia, South Africa, and the Nordics. It provides local audiences with an unrivalled collection of British box sets and original series all in one place. ITV plc Annual Report and Accounts 2022 5 STRATEGIC REPORT CHAIRMAN’S STATEMENT ## Chairman’s Statement ### In my first few months as the Chair of ITV what has struck ### memost is our team’s passion and pride in what we do. ### Thisexists right across the organisation and the evidence ### can be seen in the excellence of our creative output and ### inthe shared commitment to make a difference to the ### livesof our viewers and the communities we serve. | The expectations of business to be good | This is a privileged position and one the | Or, on the environmental agenda, the | | --- | --- | --- | | corporate citizens is growing all the time | Company is mindful not to overreach | Company was proud to announce its | | and I have been very pleased to find in ITV | butwe can use the power of our | Climate Content Pledge which seeks to | | a culture that truly believes in it and not | communication for good and we take | inspire viewers to take action to reduce | | only wants to meet this expectation but | active steps to do so, when appropriate | their personal climate impact. This | | to lead it. Our purpose is to entertain and | and when we see the opportunity. | initiative, along with our work to improve | | inform and we are very good at this, | | corporate governance and transparency | | engaging millions of people with the | In 2022 for example, 47million positive | on climate action helped earn ITV a | | highest quality content. But we also | actions to improve the UK’s physical | coveted ‘A’ rating in 2022 from the | | recognise that we have an ability to | andmental health can be attributed | internationally renowned Climate | | influence social attitudes and individual | toITV campaigns on these two key | Disclosure Project(CDP). | | actions like few other commercial | societalissues. | | organisations can. ### Andrew Cosslett CBE ### Chair 6 ITV plc Annual Report and Accounts 2022 This demonstrable commitment to purpose, culture and values is led from the top. Much of the credit goes to my predecessor, Sir Peter Bazalgette who, after nine years on the Board, six of them as Chair, stepped down last September with the Company's sincere thanks for all that he had achieved. Thanks also go to our talented management team who really 'walk the talk' on social impact, under the excellent guidance of our Chief Executive, Carolyn McCall. The Company reported a robust set of financial results for 2022 despite the significant challenges in the wider economy. Advertisers clearly still value the size and reach of the audience that ITV provides and, as a result, we were able to record the second highest level of total advertising revenue in our history. Our two main growth drivers, ITV Studios and our digital business within Media & Entertainment, saw their revenues grow by 18% and 18% respectively. Adjusted EBITA was down 12% on prior year which mainly reflects increased investment in content and in the launch of ITVX towards the end of the year. Free cash flow was £280 million (2021: £407 million). The Board acknowledges the importance of dividends to shareholders and has proposed a final dividend of 3.3p, giving a full year dividend of 5p per share (2021: 3.3p). The industry environment in which ITV operates is changing rapidly and we expect new and emerging technologies to continue to make change an ever present reality of our competitive landscape. But ITV is well placed to take advantage of these changes. ITV employs a powerful operating model that creates value by integrating a high value, international Studios business with the UK's leading commercial broadcast platform. The synergies created by this model are considerable and in 2022 we took steps to strengthen the model further. Actions included the acquisition of two highly acclaimed production businesses and, in Q4, the launch of ITVX, a scaled, all new streaming service to replace ITV Hub offering both a free ad-funded tier and a subscription ad-free tier. The integration of the Studios acquisitions has been smooth and the early performance of ITVX is highly encouraging. These strategic moves will bolster ITV's global reputation in production, build our already powerful distribution arm and, via ITVX, give advertisers more reason to direct UK media investment to ITV. ITV is powered by its people. We are fortunate to be able to attract and retain the brightest and best in our sector. We have a strong and capable Board who I have the privilege to lead, a talented senior team and the entire enterprise seems to buy into our mission. This is a great platform on which to build this business ![img-0.jpeg](img-0.jpeg) ![img-1.jpeg](img-1.jpeg) Britain Get Talking: 7 million people took action to support mental wellbeing as a result of 2022's Breakthrough campaign Good Morning Britain is a weekly morning news programme, produced by ITV Studios. The show attracted five million viewers each week in 2022 Vera is produced by Silverprint Pictures, an ITV Studios label, and returned for its 12th series in 2023 ITV is powered by its people. We are fortunate to be able to attract and retain the brightest and best in our sector. and I look forward to working alongside my new colleagues over the months and years ahead. For now I would simply like to thank them all for their warm welcome and for their massive contribution in a year the Company took on one of the biggest change agendas in its long history... and delivered. Andrew Cosslett CBE Chair of the Board ![img-2.jpeg](img-2.jpeg) ITV plc Annual Report and Accounts 2022 9 ![img-3.jpeg](img-3.jpeg) ITV/LEIGH IMPORT, DORISAN STATEMENT STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT ## Chief Executive’s Statement ### 2022 was a year of strong execution and significant strategic ### progress. We delivered record revenues in ITV Studios, the ### second highest advertising revenue in ITV’s history, and grew ### Media & Entertainment’s digital revenues by 18%, with the ### significant increase in content, improved user experience ### and the successful launch of ITVX. We continued to grow, strengthen and In the UK we continued to entertain and The market continues to evolve rapidly, diversify ITV Studios including through inform the nation with a strong slate of with growing demand globally for quality theacquisition of Plimsoll Productions, drama, entertainment and news content; changing viewing habits; and the aleading natural history producer. In programming. And as a Public Service desire of advertisers for both mass reach Media & Entertainment (M&E) the launch Broadcaster (PSB) we contribute to our and data‑led addressable advertising. We of ITVX, our new free, ad‑funded culture and society, whether creating are confident in our ability to execute our streaming service was received extremely shared moments, highlighting difficult More Than TV strategy which will ensure well by viewers and advertisers. We issues or running campaigns for mental we capitalise on the opportunities and alsocontinued to invest behind Planet V, and physical wellbeing. mitigate the risks of this evolving market. ourowned and operated addressable advertising platform, through which over90% of our addressable advertising inventory is now sold. ### Carolyn McCall ### Chief Executive 8 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT ### Financial highlights Both ITV Studios and M&E performed better in 2022 than we expected at the The Thief, His Wife and The Canoe start of the year. was one of the UK’s top five most‑watched dramas in 2022 Total ITV Studios revenue grew ahead of the market, up 19% at £2,096million, with growth across all parts of the business and is now above 2019 levels. Adjusted EBITA was up 22% at £259million with a margin of12.4%, up from 12.1% in 2021. M&E’s total revenue was down 1% at £2,249million, driven by 1% decline in total advertising revenue as expected. This was | still the second highest advertising revenue | ITVX launched successfully in | | --- | --- | | in ITV’s history and within this digital | Q4 2022, with a multichannel | | advertising revenues were up 17%. Total | marketing campaign to mark | | digital revenues were up 18% at | thelaunch | £411million. M&E’s adjusted profit was down 22% at £464 million which largely reflects increased investment in content and in ITVX. Total group external revenues increased 8% to £3,728million, driven by non‑advertising revenues up 16% as we increasingly rebalance the business. Group adjusted EBITA was down 12% and adjusted EPS was down 14% at 13.2p reflecting investment in future growth partly offset by £23million ofpermanent cost savings. We have now delivered £106million of cost savings since 2018, ahead of our £100million target. Statutory operating profit remained flat and statutory EPS increased by 14% to10.7p. We again delivered good cash generation inthe year, with profit to cash conversion of75% and generated £280 million of free cash, slightly lower than in previous years | as we invest in ITVX and grow ITV Studios. | Our strategic vision | | For each of these priorities we have set key | | --- | --- | --- | --- | | Our balance sheet is robust with net debt | The Board keeps the More Than TV strategy | | performance indicators and targets to | | at31December2022 of £623million and | under regular review to ensure it is responsive | | deliver by 2026 and with the good progress | | our net debt to adjusted EBITDA was 0.8x | to market changes. The Management Board | | we have made to date, we are on track and | | (31December2021: 0.5x). | and I are totally focused on executing our | | confident we can deliver against this. We | | | More Than TV strategy which will create | | are viewer and customer driven and every | | We are mindful of the macroeconomic | amore valuable digital media and | | decision will combine our creativity and | | uncertainty and | | entertainment | data insight to achieve this. | | remain focused on | | company and deliver | | | tightly managing our | | returns to | ITV has a unique market position as a | | costs and cash flow. | | shareholders. | globaland diversified vertically integrated | ## I am incredibly Our priority remains to producer broadcaster and streamer with invest in our key assets Our vision for 2026 is content central to everything we do. This ## grateful for the and value drivers in to be a leader in UK gives us a real competitive advantage in line with our strategic streaming, and an achieving our vision. It provides ITV Studios ## hardwork and priorities, balancing expanding force in UK with a base of core commissions and a this with our and global content. significant promotional engine for its ## commitment all commitment to Weare focused on content, and enables cross‑promotion and investment grade three priorities to monetisation of our intellectual property ## ourcolleagues metrics over the deliver this vision: (IP) across all our business models. It ## medium term and show– it makes • Expand our UK and secures access to great content for ITV’s returns to global production channels and streaming business; it ## shareholders. ITVthe creative, business enables us to offer advertisers a unique • Supercharge our opportunity to integrate their brands into ## Reflecting the Board’s collaborative and Streaming business, our shows; and very importantly, it helps us confidence in the and attract and retain creative talent, which is ## business and its commercial • Optimise our critical in a successful creative business. strategy, as well as Broadcast business ## continued strong cash businessthat we are. generation, it has proposed a final ordinary dividend of 3.3p, giving a full year ordinary dividend of 5.0p. The Board remains committed to paying a full year ordinary dividend of at least 5.0p, which it expects to grow over time. ITV plc Annual Report and Accounts 2022 9 STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT CONTINUED Our newest labels created through our recent talent deals have delivered an | Endeavour returned | impressive slate of programmes, including | | --- | --- | | toscreens in February | Nolly from Quay Street Productions and | | 2023 for its ninth and | You & Me from Happy Prince. | final season. It is produced by As a creator, owner and distributor of Mammoth Screen, an content, ITV can maximise the global value ITV Studios label, and of its IP through optimising the windowing first aired in 2012. It of content across different distribution has since been sold to channels and customers. It has built one of over 200 countries the largest and broadest catalogues in the worldwide world with over 90,000 hours of content. Our scripted labels are creating and producing high‑quality content with international appeal for free‑to‑air broadcasters and increasingly streaming platforms, such as Physical for AppleTV+ which returns for a third series in 2023 and Ten Year Old Tom for HBO Max. In 2022, high‑end scripted hours increased by 58%to 276. ITV is one of the largest producers and distributors of unscripted formats which are monetised in multiple markets internationally by producing versions in different territories. This includes established formats such as The Voice (72territories) and Love Island (26territories) and formats with the potential to be future hits such as: My Mom, Your Dad, which has already been commissioned in ten territories and Loaded in Paradise which has launched on ITVX. In2022, we had 19 formats which were sold in three or more territories, compared to 15in 2021. Global streamers continue to drive the demand for content internationally. We have significantly increased our percentage | Dancing On Ice is produced by | of total revenues from streaming platforms | | --- | --- | | Lifted Entertainment, an ITV | to 22%, from 13% in 2021. Following this | | Studios label andreturned to | success we have increased our 2026 target | | screens for its 15th series in | to 30%, from 25%. Whilst streamers’ | | January2023 | content spend is not expected to grow at | the same rate as in recent years, we still expect total content spend in the global | ITV Studios | To deliver this growth we are focused on | market to continue to grow in the medium | | --- | --- | --- | | ITV Studios is a leading global producer of | four growth drivers to ensure ITV Studios is | term by around 2 to 3%. | | TV shows operating in 13 countries, across | well placed to take advantage of the | | | 60+ different labels. It is also diversified by | growing demand for quality content: | Media & Entertainment (M&E) | | content genre and type of customer. | • growing our scripted business to meet | ITV is the largest commercial broadcaster | | | the significant demand for scripted | inthe UK with unrivalled audience size and | | ITV Studios is the number one producer in the | content globally | reach. Its share of viewing amongst | | UK and is one of the top three international | • growing our global formats business in | commercial broadcasters is 33.8%. In 2022, | | producers in the majority of the markets in | order to maximise the value of existing | itdelivered over 90% of the top | | which it operates, which gives it scale and | formats and creating new global formats | 1,000audiences (which are key to | | has enabled it to build relationships with | • further diversifying our customer base to | increasingly scarce brand building mass | | the key content buyers and leading creative | capture the growth in content spend from | reach) and its scale and quality enables it | | talent in those markets. TV production | local and global streaming platforms | to effectively compete for viewing and | | continues to be a growing market and ITV | • continuing to attract and retain leading | command a premium from advertisers. ITV | | Studios, due to its size and diversity, has | talent | has an 18% share of video viewing amongst | | grown consistently ahead of the market | | broadcasters and streamers in the UK | | and will continue to do so. Its scale and | ITV’s federated label model and the strong | (across the four major viewing screens – TV, | | quality also gives it the opportunity to | connection with ITV M&E, (and therefore | mobile, PC and iPads) which is broadly the | | derive industry‑leading margins. | access to ITV‘s mass reach and powerful | same as all the streaming services combined. | promotional engine in the UK), makes it a | From this strong position, we expect ITV | very attractive home for top creative talent | | --- | --- | | Studios to continue to grow ahead of the | and we are proud to be able to continue to | | market over the medium term, delivering | attract the best talent in the market, | | atleast 5% revenue growth on average per | including in 2022 welcoming Plimsoll | | annum, at a margin of 13 to 15%, although | Productions, Lingo Pictures (an international | | itwill be at the lower end of this range in | scripted producer) and Ben Stephenson, | | theshorter term due to increased | who set up an international scripted label, | | production costs and the growth in our | Poison Pen Studios, in ITV Studios. | scripted production. 10 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT CONTINUED | ITV’s leading position in linear TV | Over the last four years, ITV has invested | Within this overall UK market, linear TV | | --- | --- | --- | | advertising has enabled the Group to build | indata and technology resource and built | advertising has been resilient, despite a | | a substantial national streaming position | itsown proprietary ad tech stack, branded | gradual decline in audiences. In fact, ITV’s | | with ITV Hub and BritBox UK, and now ITVX. | Planet V, which enables advertisers to buy | ad revenue reached an all time high in 2021, | | ITVX, our ad‑funded, free to watch service | highly targeted advertising. As a result, ITV | and 2022 was the second highest | | was successfully launched in Q4 2022 to a | and ITVX are well positioned to capitalise on | advertising revenue year ever despite the | | positive reception from viewers and | their unique strengths to compete with | impact of the conflict in Ukraine and cost of | | advertisers. ITVX has a significant volume | newer entrants, such as YouTube and global | living crisis. This reflects the unique role | | of high‑quality original exclusive | subscription services: ITV has deep | mass reach plays in the advertising mix with | | programming; one of the UK’s largest free | relationships with agencies and | its ability to build brands and drive | | film libraries; 20 new FAST channels and all | advertisers; brand safe and measured | performance and we expect that the cost | | ITV broadcast channels, with live sport and | advertising; a track record of | of advertising will rise as mass reach | | entertainment. ITVX has a premium | commissioning and producing content | becomes increasingly scarce. While in the | | subscription tier where consumers can | which appeals to UK audiences; and over | short term the advertising outlook is | | watch all programmes plus BritBox UK (ITV | 95% prompted awareness for ITV amongst | challenging, we expect linear advertising | | and BBC library content) ad free. In total | UK viewers. | revenues to remain resilient and continue | | ITVX has 19,000 hours of content. In 2022, | | to be highly cash generative. This underpins | | ITV increased monthly active users by 6% | The advertising market has grown | our continued growth investment in ITVX | | to 10.5million; total streaming hours by 9%; | consistently in the UK (delivering a CAGR | and Studios, which power ITV. | | total monetisable streaming hours by 18% | of7% over the last ten years). This growth | | | and UK subscribers by 17% to 1.4million. | has been primarily driven by online. | ITVX has over 37million registered users, | giving ITV, one of the largest first party data sets in the UK. In a world of increasing privacy legislation, this gives ITV a competitive advantage and the opportunity to further build a targeted advertising offer enabling ITV to compete and take share in the growing advertising segments of online video and display. Our ability to take share in these growing segments of the market is underpinned by Planet V. Planet V is ITV’s proprietary, self service programmatic addressable advertising platform for agencies to book targeted advertising (adverts dynamically inserted into the viewers stream based on over 20,000 different data points). It is now the second largest video ad‑tech platform in the UK, (second only to Google) and used by all major agencies. The platform allows advertisers to capitalise on: • sophisticated targeting based on many dimensions – e.g. demographic, household wealth and income, purchasing history, geography, weather, creative context and many more • the lower creative cost of running a campaign • a lower total campaign cost and • ease of booking It is being used by existing advertisers to combine mass reach with targeted | Balthazar is a French crime | advertising and by new to ITV advertisers, | | --- | --- | | thriller produced by Tetra | using targeted only, all using our first party | | Media Studios, an ITV Studios | data (and their own first party data), with | | label. The fifth series launched | gold standard measurement. Between the | | on TF1 in January2023 | launch of Planet V in 2020 and the end of | 2022, ITV’s targeted digital advertising revenue grew by over 60% and attracted over 600 new advertisers to ITV. In addition to accessing new pools of revenue, targeted advertising typically attracts higher pricing points. As a result of the investment in ITVX and Planet V, our ability to deliver mass reach and targeted advertising and our close relationship with agencies and marketeers, ITV is expected to thrive, innovate and grow in a vibrant long‑term growing UK Blackwater is a Scandinavian advertising market. drama series produced by Apple Tree Productions, an ITV Studios label, for SVT ITV plc Annual Report and Accounts 2022 11 STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT CONTINUED | Our Purpose and | Our audiences have had a lot to deal with | Our Diversity and Inclusion Acceleration | | --- | --- | --- | | SocialPurposepriorities | this year. The physical and mental health | Plan is focused on creating and showcasing | | Our purpose is to entertain and connect | pressures caused by the pandemic are | content that reflects modern audiences | | with millions of people globally, reflecting | ongoing and becoming exacerbated by the | and ensuring there is equality of | | and shaping culture with brilliant content | mounting burden of the cost of living. This | opportunity and that ITV is an inclusive | | and creativity. | has been front of mind for us when | place to work. We’ve championed diversity | | | developing campaigns and initiatives that | across our biggest shows and created new | | Our Environmental, Social and Governance | can really make an impact, such as Britain | opportunities for underrepresented groups | | agenda is an essential part of our purpose | Get Talking which encourages millions to | in our workforce, from senior leadership | | and our ability to deliver our goals. | take action and ensure people get the help | programmes like Amplify, to Kickstart, a | | | they need. | six‑month placement scheme for those | | ITV is committed to driving positive social | | coming into the industry. | | change and is uniquely placed to do this on | Climate Action remains a priority which | | | and off‑screen through our extensive | means ensuring we significantly reduce our | As part of our Giving Back priority, we are | | reach, supported by rigorous targets and | emissions in line with our science‑based | very pleased to have been able to play a part | | social purpose priorities – Better Health, | targets by 2030 and achieve Net Zero by | in helping those affected around the world | | Diversity & Inclusion, Climate Action and | 2050 in how we make, broadcast and | by tragic humanitarian circumstances. | | Giving Back. | stream our shows, but also using our reach | OurConcert for Ukraine and annual charity | | | to inform and inspire audiences to make | football match, Soccer Aid for UNICEF, | | | greener choices. | raised a combined total of over £29million | thanks to the generosity of our viewers, advertisers and our own colleagues. ITV Pride is our company‑wide LGBTQ+ (Lesbian, Gay, Bisexual, Trans and more) colleague network with over 300 members The Martin Lewis Money Show Live is a current affairs show, produced by Multistory Media, an ITV Studios label 12 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT CONTINUED ### Regulation The government published its media WhitePaper in 2022 setting out its plans totransition from public service broadcasting (PSB) to public service media(PSM). We remain fully engaged withOfcomand government, particularly on theneed for prominence, inclusion and fairvalue for PSBs on all major platforms, including online. The government intends tointroduce a Media Bill as soon as parliamentary time allows and we are encouraged by the broad political consensus for the Bill. We continue to make the case for Women’s Rugby World Cup aired on ITV and evidence‑based regulation of advertising, ITV4, with all games shown live on a UK toensure that any economic impact is free‑to‑air broadcaster for the first time justified by compelling public health or other benefits. We do not believe the government made that case in relation torestrictions on High Fat Sugar and Salt (HFSS) food and drink advertising. In a welcome move, the government used secondary legislation to push back the introduction of these restrictions until 1October 2025. ### Outlook Despite the current macro and geopolitical uncertainty we are making significant progress at pace. The short‑term outlook is challenging, with total advertising revenue (TAR) expected to be down around 11% in Q1 but we remain very focused on successfully executing the strategy and enter 2023 with strong momentum. We are well on track to deliver all our 2026 KPI targets and will continue to invest to support the strategy and the long term profitability of ITV and A Royal Grand Design sees the reigning creating shareholder value. monarch lead the renovation of Dumfries House over the space of a decade on ITV1 The combination of a scaled and expanding global TV production business, aresilient linear TV advertising business, arapidly | Colleagues | Duty of Care | growing digital targeted TV advertising | | --- | --- | --- | | It is easy to say that colleagues are at the | Supporting the mental and physical health | business and a unique verticallyintegrated | | heart of our success. I hope they all see, | and safety of colleagues and others who | producer broadcaster and streamer model | | through our actions that this is the case. | work with ITV and those participating in our | means that ITV is growing and diversifying, | | One of the best parts of my role is meeting | productions, is a key priority. I chair the | reducing its dependence on the linear | | ITV colleagues from all areas, and across | Duty of Care Operating Board which meets | business. While linear will continue to have | | the very strong regions of the UK and also in | regularly. With the help of external experts, | an important role in the advertising mix, by | | our offices internationally. Their input and | it provides guidance around best practice | 2026 we expect around two thirds of ITV’s | | feedback is invaluable, and we act on that | and evolves our approach to mental health | total revenues to come from our growth | | frequently. I am incredibly grateful for the | and wellbeing. The Duty of Care team is in | drivers – ITV Studios and M&E digital | | hard work and commitment all our | place to provide expertise to support the | revenues. This is expected to drive | | colleagues show – it makes ITV the | business. A key priority in 2022 was to | increased profits, from an inflection point | | creative, collaborative and commercial | ensure our Speaking Up policy provided the | in 2023, creating a more valuable business, | | business that we are. We have achieved a | right channels and support for our | underpinned by astrong balance sheet, | | huge amount in 2022 which would not be | colleagues, which remains a focus for 2023. | continued investment in organic and | | possible without them. | | inorganic growth and a regular and | | | ITV continues to monitor and respond to | growingdividend. | | We are committed to investing in and | historical issues to further strengthen our | | | building a high performing, agile and diverse | Duty of Care policies. In the Netherlands, ITV | | ### Carolyn McCall workforce. We continue to invest in their has appointed a Dutch law firm to conduct Chief Executive | development through a range of online and | an external investigation into allegations of | | --- | --- | | in person workshops to build leadership | inappropriate behaviour surrounding The | | capability and support personal skills | Voice of Holland prior to 2020. In the UK, ITV | | development, wellbeing and resilience for | will be giving evidence and cooperating with | | all employees. | the inquest into the death of Steve Dymond, | who died in 2019 in the days following the filming of The Jeremy Kyle Show. ITV plc Annual Report and Accounts 2022 13 STRATEGIC REPORT INVESTOR PROPOSITION ## Investor Proposition | 1. | 2. | 3. | 4. | | --- | --- | --- | --- | | Unique market position | Clear strategy providing a | Strong 2022 operating | Financial strength and | | | solid platform for execution | performance with strategic | cash generation | ### and operational momentum ITV is a leading global and diversified ITV’s 2026 vision is to be a leader in UK ITV’s model delivered strong revenues ITV retains a stable investment grade Ant and Dec’s Saturday Night Takeaway vertically integrated producer streaming and an expanding global force in2022. balance sheet supported by strong and returnsfor its 19th series in 2023 broadcaster and streamer which gives in content through: • ITV Studios continued to outperform reliable cash generation to enable ITV usa real competitive advantage. the market, growing total revenues at to invest behind its key priorities. ### Expand Studios globally 19% and its revenues are now 15% There are several key pillars to ITV’s ITV maintains tight financial discipline above2019 levels. It has increased its | strongmarket position and its ability | | | with a focus on efficiencies. We have | | --- | --- | --- | --- | | | Supercharge Streaming | high‑end scripted hours by 58%; | | | tosuccessfully execute its strategy: | | | achieved £106 million of cumulative | increased the number of formats sold cost savings in 2022 compared to 2018 1. ITV Studios is a scaled, TV and streaming inthree or more countries from 15 to 19; with an incremental £50 million of ### content production business, diversified Optimise Broadcast and significantly increased the permanent savings targeted by 2026. by genre, by customer and geography percentage of revenues sold to within the growing global content market streamers to 22%, from 13% in 2021 The Board is committed to an ordinary This will create a resilient, diversified and – UK’s largest commercial producer • M&E has delivered its second highest dividend of at least 5.0p per annum, growing media and entertainment business. and one of the world’s largest advertising revenues in its history, which will grow over time. Surplus cash This will continue to reduce our dependence independent producers enabling it reflecting the unique role mass delivers, will be used for accretive, value‑adding on linear advertising, with revenue from our tobuild relationships with key content and continues to report strong M&E digital M&A or further capital returns. growth drivers, ITV Studios and M&E digital buyers and leading creative talent revenue growth, up 18%. Streaming revenues, expected to make up about two – Global distribution network with hours were up 9%, monetisable thirds of total revenues by 2026, up from alibrary of +90,000 hours of streaming hours were up 18%, and around 50% in 2018. contentrights and we are one of monthly active users were up 6%, thelargest global distributors 1. Studios revenue is expected to grow driven by significant increase in content ofunscripted formats ahead of the market and by at least 5% available; improved user interface; and – This enables ITV Studios to grow on average per annum by 2026. The the successful launch of ITVX ahead of the market and deliver EBITA margin will be between 13% to We have also been further building our industry leading margins 15% from 2023, although at the lower data‑driven and ad tech capabilities: end of the range in the shorter term 2. ITV M&E, with quality content at its core, • 90% of all ITV’s digital ad inventory is offers a strong viewer proposition across 2. Successful launch of ITVX – our new, now sold through Planet V, which has live and streaming, and an integrated free, ad‑funded streaming service. It 20,000 data targeting options and advertising proposition offering both supercharges our streaming business three way data matching for targeted mass reach audiences and targeted providing viewers with a content‑rich advertising, making inventory more addressable audiences at scale. As a destination rather than a catch up valuable for advertisers vertically integrated business it also service and provides advertisers with • Planet V 2.0 which provides users with offers advertisers the unique opportunity valuable addressable audiences at scale. anew look, better functionality and to integrate their brands into our shows In addition it has a premium, ad‑free tier. moreparameters to help build effective – ITV is the largest commercial ITVX will drive significant digital viewing campaigns is now being trialled | broadcaster in the UK, with unrivalled | and revenue growth and with our | | --- | --- | | audience size and reach. In 2022 it | established data and analytics | | delivered 93% of the top 1,000 | capabilities will drive higher‑value | | commercial broadcast programmes | data‑driven pricing models and help to | | on TV and had a 33.8% share of | deliver at least £750 million of digital | | commercial viewing | revenue by 2026 and double streaming | | – ITVX, our new, free, ad‑funded | viewing, double MAUs and double | | streaming service with 19,000 hours | subscribers from 2021 to 2026 | of content including high‑quality 3. We expect linear advertising revenues original exclusive programming to remain resilient and continue to be | 3. ITV has significant competitive | | highly cash generative and underpin our | | --- | --- | --- | | | advantages in the large and growing | continued growth investment in ITVX | | | digital advertising market supported | and ITV Studios. ITV will continue to | | | byour data and tech capabilities | optimise its model between broadcast | | | – One of the top data sets in the UK | and streaming, maintaining its share of | | | with 37 million registered user | commercial broadcast viewing and its | | | accounts on ITVX | unique ability to deliver mass audiences | | | – Planet V, our proprietary, self‑service, | whilst growing digital streaming revenues | programmatic video advertising platform which enables us to dynamically serve advertising at scale. It is the second largest ad‑tech platform in the UK, after Google, used by all the major agencies – Deep relationships with agencies andadvertisers; brand safe measured environment; track record for commissioning and producing content that appeals to UK audiences and over 95% prompted awareness for ITV amongst UK viewers 4. Fast growing international streaming service, BritBox International 14 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT INVESTOR PROPOSITION | 1. | 2. | 3. | 4. | | --- | --- | --- | --- | | Unique market position | Clear strategy providing a | Strong 2022 operating | Financial strength and | | | solid platform for execution | performance with strategic | cash generation | ### and operational momentum | ITV is a leading global and diversified | ITV’s 2026 vision is to be a leader in UK | ITV’s model delivered strong revenues | ITV retains a stable investment grade | | --- | --- | --- | --- | | vertically integrated producer | streaming and an expanding global force | in2022. | balance sheet supported by strong and | | broadcaster and streamer which gives | in content through: | • ITV Studios continued to outperform | reliable cash generation to enable ITV | | usa real competitive advantage. | | the market, growing total revenues at | to invest behind its key priorities. | ### Expand Studios globally 19% and its revenues are now 15% There are several key pillars to ITV’s ITV maintains tight financial discipline above2019 levels. It has increased its | strongmarket position and its ability | | | with a focus on efficiencies. We have | | --- | --- | --- | --- | | | Supercharge Streaming | high‑end scripted hours by 58%; | | | tosuccessfully execute its strategy: | | | achieved £106 million of cumulative | increased the number of formats sold cost savings in 2022 compared to 2018 1. ITV Studios is a scaled, TV and streaming inthree or more countries from 15 to 19; with an incremental £50 million of ### content production business, diversified Optimise Broadcast and significantly increased the permanent savings targeted by 2026. by genre, by customer and geography percentage of revenues sold to within the growing global content market streamers to 22%, from 13% in 2021 The Board is committed to an ordinary This will create a resilient, diversified and – UK’s largest commercial producer • M&E has delivered its second highest dividend of at least 5.0p per annum, growing media and entertainment business. and one of the world’s largest advertising revenues in its history, which will grow over time. Surplus cash This will continue to reduce our dependence independent producers enabling it reflecting the unique role mass delivers, will be used for accretive, value‑adding on linear advertising, with revenue from our tobuild relationships with key content and continues to report strong M&E digital M&A or further capital returns. growth drivers, ITV Studios and M&E digital buyers and leading creative talent revenue growth, up 18%. Streaming revenues, expected to make up about two – Global distribution network with hours were up 9%, monetisable thirds of total revenues by 2026, up from alibrary of +90,000 hours of streaming hours were up 18%, and around 50% in 2018. contentrights and we are one of monthly active users were up 6%, thelargest global distributors 1. Studios revenue is expected to grow driven by significant increase in content ofunscripted formats ahead of the market and by at least 5% available; improved user interface; and – This enables ITV Studios to grow on average per annum by 2026. The the successful launch of ITVX ahead of the market and deliver EBITA margin will be between 13% to We have also been further building our industry leading margins 15% from 2023, although at the lower data‑driven and ad tech capabilities: end of the range in the shorter term 2. ITV M&E, with quality content at its core, • 90% of all ITV’s digital ad inventory is offers a strong viewer proposition across 2. Successful launch of ITVX – our new, now sold through Planet V, which has live and streaming, and an integrated free, ad‑funded streaming service. It 20,000 data targeting options and advertising proposition offering both supercharges our streaming business three way data matching for targeted mass reach audiences and targeted providing viewers with a content‑rich advertising, making inventory more addressable audiences at scale. As a destination rather than a catch up valuable for advertisers vertically integrated business it also service and provides advertisers with • Planet V 2.0 which provides users with offers advertisers the unique opportunity valuable addressable audiences at scale. anew look, better functionality and to integrate their brands into our shows In addition it has a premium, ad‑free tier. moreparameters to help build effective – ITV is the largest commercial ITVX will drive significant digital viewing campaigns is now being trialled | broadcaster in the UK, with unrivalled | and revenue growth and with our | | | --- | --- | --- | | audience size and reach. In 2022 it | established data and analytics | | | delivered 93% of the top 1,000 | capabilities will drive higher‑value | | | commercial broadcast programmes | data‑driven pricing models and help to | | | on TV and had a 33.8% share of | deliver at least £750 million of digital | | | commercial viewing | revenue by 2026 and double streaming | | | – ITVX, our new, free, ad‑funded | viewing, double MAUs and double | | | streaming service with 19,000 hours | subscribers from 2021 to 2026 | | | of content including high‑quality | | Hell’s Kitchen USA, the reality cooking | 3. We expect linear advertising revenues original exclusive programming showhosted by Gordon Ramsay, returned to remain resilient and continue to be toscreens in September 2022 on FOX | 3. ITV has significant competitive | | highly cash generative and underpin our | | --- | --- | --- | | | advantages in the large and growing | continued growth investment in ITVX | | | digital advertising market supported | and ITV Studios. ITV will continue to | | | byour data and tech capabilities | optimise its model between broadcast | | | – One of the top data sets in the UK | and streaming, maintaining its share of | | | with 37 million registered user | commercial broadcast viewing and its | | | accounts on ITVX | unique ability to deliver mass audiences | | | – Planet V, our proprietary, self‑service, | whilst growing digital streaming revenues | programmatic video advertising platform which enables us to dynamically serve advertising at scale. It is the second largest ad‑tech platform in the UK, after Google, used by all the major agencies – Deep relationships with agencies andadvertisers; brand safe measured environment; track record for commissioning and producing content that appeals to UK audiences and over 95% prompted awareness for ITV amongst UK viewers 4. Fast growing international streaming service, BritBox International ITV plc Annual Report and Accounts 2022 15 STRATEGIC REPORT MARKET REVIEW ## Market Review ### The markets in which we operate are dynamic, increasingly ### competitive and rapidly changing. We are seeing increasing ### demand for content globally driven by the proliferation of both ### ad‑funded and subscription platforms. This combined with ### changes in the way viewers consume media, brings both ### challenges and exciting opportunities to ITV. 16 ITV plc Annual Report and Accounts 2022 The Serpent is a crime drama, based on STRATEGIC REPORT MARKET REVIEW ### Strong global demand for content atrue story. It is produced by Mammoth Screen, an ITV Studios label, for the BBC and Netflix internationally | Trend | How we are responding | | --- | --- | | The demand for quality content from | ITV Studios is a leading global creator, | | broadcasters and platform owners remains | producer and distributor of content, | | strong and we expect the global content | operating in 13 countries with over 60labels. | | market to continue to grow over the next five | It is diversified by content genre, customer | | years, driven predominantly by streaming | and geography. ITV is one of the top three | | platforms. While the budgets of many | international producer groups in most of | | free‑to‑air broadcasters (FTA) and Pay TV | the markets we operate in (based on | | operators are under pressure, they are | internal estimates) which gives ITV scale | | continuing to invest in their schedules, and | and has enabled us to build relationships | | despite the growth of streaming platforms, | with the major content buyers globally. | FTA and Pay TV are expected to remain the | | largest buyer segment in the market. Whilst | ITV Studios strategy is focused on growing | | --- | --- | --- | | | content spend growth from streaming | scale in scripted content in English and local | | | platforms is expected to slow compared to | languages to meet demand, as well as to | | | recent years, it will still continue to grow | diversify our customer base, particularly | | | and is expected to make up 33% of the | towards streaming platforms. Over the last | | | overall market by 2026 (Source: Ampere | few years, we have invested in creative | | | Analysis, Sept 2022). This includes spend | development and strengthening our creative | | | on all types of content including films and | talent base across ITV Studios to help drive | | | sports rights. With a focus on growing | scripted commissions and relationships | | | subscribers against a challenging backdrop, | with global streaming platforms. | | | streamers continue to demand exclusive, | Unscripted content remains important and | | | brand‑defining original content, including | we have built a healthy pipeline of returning | | | local language and library content, to meet | formats which continue to grow as well as | | | the increased expectations of new and | focusing on thedevelopment of new global | | | existing subscribers. | unscripted formats. | | | The demand for high‑quality scripted | Creating and owning the IP for our content | | | content, in particular, has increased | iskey to ITV Studios. It allows us to | | | significantly, with the global streaming | maximise its global value through | | Summertime is produced by Cattleya | platforms investing heavily to attract | optimising the windowing of content across | | inItaly,an ITV Studios label, for Netflix | subscribers, using it as a tool for | different distribution channels and | | | differentiation and prominence in an | customers, format sales, and licensing. | | | increasingly competitive global | This contributes to our higher overall ITV | | | environment. This has increased | Studios margin relative to our industry | | | competition and costs in the market, | peers. We have built one of the industry’s | The Ipcress File is a cold war spy particularly for on and off‑screen talent largest, broadest and deepest catalogues thriller series, available on ITVX. It is impacting the margin for scripted content, with over 90,000 hours of content. also distributedby Global Distribution, which is generally lower than other genres. which ispart of ITV Studios As a vertically integrated producer Demand for unscripted content remains broadcaster and streamer, ITV Studios also strong as platforms and channels also benefits from demand for its content from The Voice Kids returned for its sixth require cost‑effective, high‑volume ITV’s linear and streaming propositions, series in2022 popular series. This content supplements providing M&E with a strong and secure the expensive scripted titles and reliably content supply. attracts mass simultaneous viewing. FTA broadcasters have chosen to resurrect old ITV Studios continues to embed production formats such as Big Brother (ITV), Survivor innovation and new ways of working to help and Gladiators (BBC). mitigate production cost inflation in the market. This includes the use of remote cloud The UK remains the dominant producer editing, production hubs for key formats andexporter of unique unscripted formats. and the use of AI in production processes. The US dominates scripted and is the largest content market in the world. Other See the Operating and Financial Performance key attractive creative markets include Review for further detail on these areas. France, the Nordics, Italy, Germany, Australia, and Spain which has access to Latin American markets. ITV plc Annual Report and Accounts 2022 17 Deep Fake Neighbour Wars is a new STRATEGIC REPORT MARKET REVIEW CONTINUED ### Digital platforms and changing viewer habits comedy impressions show which launched on ITVX in January 2023 | Trend | In terms of total viewing, regardless of | | --- | --- | | The viewing day has become increasingly | which device it is watched on (e.g. TV, | | fragmented with the entry of global | mobile, PC or iPad), Broadcast TV remains | | subscription services, such as Netflix, | the most watched platform, accounting for | | Amazon Prime and Disney+; local | around 60% of an individuals average video | | streaming services such as Viaplay from | time per day, followed by YouTube and | | NENT; user generated video sharing | streamers (see chart below) (Source: | | platforms such as YouTube and TikTok; and | BARB/Thinkbox). | more recently ad‑funded streaming | services both from large global | How we are responding | | --- | --- | | conglomerates, such as Hulu, Pluto TV | We recognise the viewing landscape has | | (ViacomCBS) and Tubi (FOX), and from | become increasingly competitive and | | global subscription streaming platforms | fragmented, and while ITV’s linear channels | | such as Netflix and Disney+, launching | continue to drive significant audiences, | | ‘ad‑lite’ subscription tiers. These are all | viewers also want the flexibility to watch an | | competing with live and streaming viewing | increased choice of content whenever and | | from existing platforms. | wherever they are. | | The rise in the number of platforms offers | We successfully launched ITVX, our new, | | viewers increased choice and flexibility | free, ad‑funded streaming platform in Q4 | | about what, how, where and when they | 2022. ITVX significantly strengthens our | | watch content. This has significantly | offering to viewers – making it a destination | | impacted viewing habits globally, with the | rather than a catch up service – and offers | | COVID‑19 pandemic further accelerating | both a linear live experience through its | | some of the digital viewing trends we had | traditional channels and new FAST | | previously started to see. There has been a | channels, and on demand access to weekly | | significant increase in streaming viewing on | new exclusive original content alongside all | | TVs (particularly connected TVs) and | of the linear content and a substantial | | non‑TV devices (such as smartphones, | archive. As well as the free content | ### Average video time per day tablets and computers). This evolution, available on ITVX, ITVX’s premium however, is not uniform across subscription tier offers access to exclusive All individuals demographics, with younger viewers BritBox UK content – the largest collection spending proportionally more time of British box sets – all ad‑free. ## 4hrs consuming content on non‑TV devices, while older demographics spend We will invest around £1.3 billion annually in ## 30 comparatively more time engaging with our content budget across all our channels broadcast television. and platforms. We will invest in high‑quality, ## mins trusted content across a wide range of | In the UK, linear viewing of Broadcast TV | genres, including large family entertainment | | | | | --- | --- | --- | --- | --- | | (which is defined as viewing of a TV set to | shows, sport, drama, factual and news | | | | | broadcast programmes that are viewed | which will drive simulcast viewing on ITVX | | | | | either on the day of transmission or within | and mass audiences on linear channels. | Broadcaster | YouTube | Subscription | | seven catch‑up days. This can mean live, | | TV | | streaming | | recorded playback or video on demand via a | In addition to our UK streaming proposition, | | | | | TV set) remains very popular and reaches | | 59.5% | 16.4% | 13.7% | we also have our successful BritBox 83% of the population (with a TV set) each International service in the US, Canada, week. And within broadcast TV viewing, live TikTok Online Adult Other online Australia, South Africa and the Nordics. video video viewing made up 82% in 2022 (Source: | BARB). Viewing on public service | See the Operating and Financial Performance | | | | | --- | --- | --- | --- | --- | | | | 4.4% | 3.1% | 2.2% | | broadcasters (PSB) in the UK has remained | Review, and Strategy sections for further detail. | | | | more resilient than linear channels in other markets and is helped by the strength and DVD Cinema investment in original content made by the ## PSBs, particularly the BBC and ITV. 0.4% 0.3% Source: 2022, BARB / Broadcaster stream data / Overall usage of a TV set (including Viewers Logic/ IPA Touchpoints 2022 / Pornhub / UK broadcast TV, streaming platforms, Cinema Advertising Association (CAA), Office of YouTube and games consoles) is declining, National Statistics (ONS) down 9% in 2022 to 231 minutes per person, with 2021 partly benefiting from strong viewing volumes as a result of COVID‑19 stay‑at‑home restrictions in H1. Within this, the total number of viewing hours of broadcast TV fell by 12% and other uses of a TV set (such as on streaming platforms, YouTube, and games consoles) declined by 3%, with the relative resilience of the latter attributed predominantly to streaming. (Source: BARB – C7 viewing via a TV set, within seven days of original transmission, recorded or video on demand). 18 ITV plc Annual Report and Accounts 2022 The Walk‑in produced by ITV Studios, STRATEGIC REPORT MARKET REVIEW CONTINUED ### The UK advertising market ### dramatises the infiltration of far‑right terrorist Average video advertising time group National Action, foiling a plot to murder ### per day an MP ### Trend All individuals The UK advertising market continues to grow, up 7% CAGR over the last ten years. In2022, ## 17 total advertising spend grew 9% year‑on‑year to £35billion(2021:£32billion). This growth ## mins has largely been driven by online advertising, up 10% in 2022 and up 17% CAGR over the last ten years. Online is the largest category of advertising spend followed by TV advertising (including spot, streaming, sponsorship and other advertising related revenues), which together made up 88% of | | Broadcaster | YouTube | TikTok | | --- | --- | --- | --- | | the advertising market in 2022 (2021: 88%). | TV | | | | Linear mass reach helps advertisers build | 83.6% | 12.2% | 2.5% | brands and drive performance. Online advertising provides advertisers with a Other online Cinema targeted proposition, requires a lower video campaign budget compared to TV, and ## provides brands with a quick, short‑term 1.3% 0.4% impact for their marketing campaign. Source: 2022, BARB / comScore / Broadcaster stream Within online advertising, search is the data / IPA Touchpoints 2022 / Viewers logic to model largest, dominated by Google, followed OOH viewing time byDisplay and Online Video, dominated * YouTube ad time modelled at 4.1% of content byGoogle and Facebook. time, TikTok ad time modelled at 3.4% of content time using agency and broadcaster data The UK advertising market, and particularly television spot advertising, has been The Suspect is a drama series produced by impacted by macroeconomic uncertainty, ITVX enables ITV to significantly increase World Productions, an ITV Studios label | however in 2021, ITV achieved | digital advertising inventory and reach, | | --- | --- | | record‑breaking advertising revenues, | offering advertisers targeted advertising | | and2022 advertising revenues were the | atscale in a brand‑safe, trusted and | | second‑highest on record. Other categories | measured environment. Planet V, our | | such as outdoor, press and cinema | scaled programmatic addressable | | advertising have not fully recovered above | advertising platform, is the UK’s | | pre‑pandemic levels (Source: Advertising | second‑largest programmatic video | | Association January 2023). | advertising platform, after Google. It is a | self‑service platform which allows While streaming viewing and advertising advertisers and agencies to plan and book Queens for the Night aired in the UK in has grown strongly, viewing of TV (live their campaigns 24/7 using ITV’s data, November 2022. ITV Studios has acquired linear, simulcast or streamed) advertising which can also be blended with advertisers’ therights in each territory where it has an remains dominant accounting for over 80% and others’ first‑party data in a GDPR unscripted production base and | distributionrights for the format and | of an individuals average video advertising | compliant way. ITV has 37 million registered | | --- | --- | --- | | finishedversionsworldwide | viewing, and 56% for 16‑34s (see chart | users, giving ITV one of the largest | | (excludingtheUK) | above) (Source: BARB/Thinkbox). | first‑party data sets in the UK. In a world of | increasing privacy legislation, this gives ITV ### How we are responding a competitive advantage. ITV’s linear television channels continue to offer unique scale and reach of all the key The advertising market is highly competitive, demographics that advertisers target, and it with global streamers having now entered remains a cost‑efficient, flexible and trusted the advertising market. However, ITV has a way of advertising and an important part of highly experienced team that are well versed marketing campaigns. We have focused on in competing with new entrants to the developing deep strategic partnerships advertising market. We offer our advertising with our advertisers and agencies, with clients something no streamer is able to – data‑driven insights to demonstrate the the best of both worlds – which allows power of television. Over the last year, we advertisers to grow their brand through the have successfully brought new advertisers unparalleled mass simultaneous reach to television, encouraged existing digitally audience generated on ITV, whilst extending mature brands to increase their spend. As a incremental reach through a targeted vertically integrated producer broadcaster offering on ITVX. This is supplemented by and streamer, we are able to provide innovative data and content advertising innovative ways for brands to advertise on offerings that are unique to ITV. television, such as through advertiser‑funded See the Operating and Financial Performance content, brand partnerships, product Review, and Strategy sections for further detail. placement and sponsorship. ITV’s deep relationships with advertisers, its investment in ITVX, Planet V and data, enables ITV to increasingly capture advertising revenues in the rapidly growing online market, driving digital revenue of £411 million in 2022. ITV plc Annual Report and Accounts 2022 19 STRATEGIC REPORT OUR STRATEGY ## Our Strategy ### We have evolved our strategy to ensure ITV is best placed to ### furthercapitalise on the opportunities presented by the rapidly ### changing viewing, content production and advertising environments. ### Executing our strategy effectively will further strengthen and ### diversifyITV, create a more valuable future facing digital media and ### entertainment company and deliver returns to our shareholders. ## Our More Than TV strategy Our purpose is to entertain and connect ## Our purpose Our 2026 vision with millions of people globally, reflecting ### We entertain and connect A leader in UK streaming and shaping culture with brilliant content and creativity. This is aligned to our 2026 ### withmillions of people andanexpanding global force strategic vision, to be a leader in UK ### globally,reflecting and incontent. streaming and an expanding global force in ### shapingculture with brilliant content. It is becoming increasingly clear ### content andcreativity. that companies with a strong and clear purpose drive increased value. Our Social Purpose strategy is an integral part of delivering our purpose and our 2026 STUDIOS GOAL Grow revenues on strategy. See Social Purpose from page44. average by at least 5% per annum, which is Our initiatives to drive growth and future ahead of the market ### Expand value are clear. Delivering on our strategy Studios will be achieved by focusing on three corepriorities: Further expanding by genre, geography and ### customers and growing faster than market Expand Studios globally Double scripted hours* Double our business with streamers* ### Supercharge Streaming Expand global formats ### Optimise Broadcast ### Supercharge Streaming These priorities are not independent. They Driving digital viewing and Vertically work together – reinforcing each other, Integrated revenuethrough ITVX and Planet V, Producer creating synergies and delivering value. Our ITV’s leading addressable Broadcaster and vertically integrated producer broadcaster advertising platform Streamer and streamer model provides us with a real * competitive advantage. Double monthly active users * Double streaming viewing * How we will deliver our strategy ### Double UK subscriptions Optimise The key to successfully delivering this Broadcast strategy is by digitally transforming across Digitally transforming as we continue everything we do. We will have a laser focus toattract commercial broadcast on viewers and every decision will combine audiences of unparalleled scale our unique creativity with data‑driven insight. Maintain a share of at least 80% of the top In addition, we will continue to: 1,000 commercial television programmes • Strengthen both our creative and Maintain share of commercial viewing commercial teams, ensuring we have the Scale linear 2026 M&E GOAL right skill set and culture to deliver our addressableadvertising More than double digital strategic vision, particularly in respect of revenue to at least £750m across M&E our technology and data functions • Ensure we own and manage our rights efficiently and effectively. Maximise the value of these rights across our Studios, * Double from full year 2021 See KPIs from page 24 Streaming and Broadcast business models • Further create strong partnerships with broadcasters, platforms and technology companies both in the UK and globally. Work with these partners to ensure the prominence of our content and that we can monetise it wherever it is consumed 20 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT OUR STRATEGY ## Core priorities ## ITV Media & ## STUDIOS ENTERTAINMENT (M&E) The M&E division has two business units – Streaming and Broadcast – to reflect and to ensure we maintain a strong, branded and data rich relationship with our viewers and advertisers. ### Expand Studios globally Supercharge Streaming Optimise Broadcast Our aim is to be a leading creative force in We are supercharging streaming with the While streaming viewing continues to grow global TV and streaming content production, launch of ITVX, our free ad‑funded significantly, linear broadcast remains very growing our revenues faster than the streaming service. ITVX leverages our important to both our viewers and advertisers. market. We will continue to diversify ITV investments to date in ITV Hub, BritBox UK, Studios by genre, geography and customer Planet V and data to drive digital viewing and Our priorities for Broadcast are to: to take advantage of the strong growth in revenue growth with a material increase in • Maintain our USP of delivering live mass demand for content globally, particularly content spend. It significantly strengthens audiences on our linear channels as we from streaming platforms. our offering to viewers – creating a invest in our broad schedule, in particular destination for viewers rather than a sport, drama and big entertainment Our key priorities are: catch‑up service. For advertisers it delivers shows. These audiences are highly • Growing our international scripted valuable addressable audiences at scale valuable and highly demanded by business by continuing to invest in andour established data and analytics advertisers as they build their own creative development capabilities will drive higher‑value, brands and ITV remains the first • Growing our global formats business by data‑driven pricing models. ITVX also has destination for advertisers to obtain maximising the value of our key formats an integrated premium subscription tier, these audiences at scale and developing new hit formats that providing greater flexibility to both our • Focus on scaling our linear addressable travel internationally viewers and streaming business model. advertising capabilities, building on our • Further diversifying our customer base investment in Planet V and our data, by serving fast‑growing streaming analytics and digital capabilities platforms (both global and local) • Continue to build more strategic and • Attracting and retaining leading talent, creative partnerships with our advertisers and nurturing the right creative and • Continue to digitally transform ITV, the commercial environment for our talent UK’s biggest TV advertising platform toflourish • Continuing to collaborate across our We have a data‑driven viewing model with one content budget across all our platforms network of over 60 production labels to and channels, which will enable flexibility to optimise viewing and revenue. benefit from ITV’s scale and diversity • Increasing the use of technology and ## innovation in production to drive BritBox efficiencies ## INTERNATIONAL In addition to our subscription streaming services in the UK, we are continuing to roll‑out We also continue to consider selective BritBox International, which is seeing strong growth in its subscriber base across territories. value‑creating acquisitions and talent The service is currently available in eight countries and has 3.0 million subscribers deals in both scripted and unscripted to (31December2021:2.4million subscribers). We will continue to explore opportunities to secure the best creative talent and IP. further expand its international footprint. KPIs and ambitions We have 2026 KPI targets aligned with our priorities, which are set out in the KPI section. See KPIs from page24 ITV plc Annual Report and Accounts 2022 21 STRATEGIC REPORT OUR BUSINESS MODEL ## Our Business Model ## 1. Our vision ### Our vision for 2026 is to be a leader in UK streaming and ### anexpanding global force in content. Our vision for 2026 is to be a leader in UK streaming and an expanding global ### Using our strategic assets... force in content. This is aligned with our purpose of entertaining and connecting with millions of people ## 2. Our strategic assets globally, reflecting and shaping culture with brilliant content and creativity. We will continue to expand and diversify our UK and global content business, | supercharge our streaming business, | Creating and owning | Our strong, trusted | >6,000 talented | One of the largest first | | --- | --- | --- | --- | --- | | and optimise our broadcast business. | the rights to quality | brand, products and | commercial and | party datasets in UK | | | content and | culture | creative colleagues | and second largest | | | intellectual property | | | programmatic | We are confident that our vision and advertising platform strategy is the right long‑term plan for in UK ITV in a dynamic market environment. We are well positioned to successfully ## 10.5m 93% 83% execute our More Than TV strategy We have 10.5 million monthly In 2022, 93% of the top 1,000 TV reaches 83% of the UK which will further strengthen and active users (MAUs) across all programmes on commercial population (with a TV set) diversify ITV, creating a more valuable ourplatforms broadcast TV were on ITV every week digital media and entertainment business and deliver sustainable and | growing returns to shareholders. | >£1.2bn | >60 | 90,000+ | | --- | --- | --- | --- | | | We invested over £1.2 billion | ITV Studios has built | active hours of content in the | | | incontent across our channels | significant scale and | Global Distribution catalogue | | | and platforms in 2022 which | diversification globally | | | | willincrease to around | withover 60 labels across | | | | £1.3billion in2023 | 13countries | | ### ...and our competitive advantages... ## 3. Competitive advantages World‑class content Delivering unrivalled commercial audiences At the core of ITV is our focus on creativity and and addressable audiences at scale content, whether creating and selling our unique As a result of the scale and reach of our channels content around the world or investing in and the significant investment we make in quality third‑party content to distribute across multiple content across our channels and platforms, we platforms in the UK. Internationally, we have built deliver mass simultaneous audiences on our production and distribution scale in key global broadcast channels and targeted addressable creative markets through organic growth, selective audiences at scale on ITVX, both in a brand‑safe acquisitions and talent deals. We are one of the and measured environment. Our digital advertising biggest independent producers in theworld, the is sold through Planet V our programmatic video largest commercial producer in the UK and one advertising platform, which is the second largest of the largest format distributors worldwide. in the UK after Google. Our IP, insight and data on viewer and advertiser behaviour also helps us Global formats and distribution build deeper, more strategic and creative ITV has built relationships and a broad customer partnerships with advertisers and agencies. base globally with major networks, streamers and local broadcasters, to whom we sell our Vertically integrated producer broadcaster world‑class content. and streamer Our vertically integrated model creates many Intellectual property competitive advantages. It provides ITV Studios ITV has developed, acquired and owns the rights with a bedrock of core commissions and a to a diverse portfolio of shows, particularly formidable promotional engine for its content; drama and entertainment, that are hugely enables cross‑promotion and monetisation of popular. Ownership of this intellectual property ITV Studios content across our business; secures allows us to maximise monetisation access to great content for ITV’s channels and opportunities, both through programme and streaming platforms; and helps us to attract and format sales internationally, and more broadly retain the best creative talent in the industry. through consumer products and interactive experiences to deepen engagement with our IP. Colleagues Our colleagues are at the heart of ITV’s success. Their skills, capabilities and commitment enable ITV to deliver on its strategic ambitions, and build the creative, inclusive and commercial business that ITV is. 22 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT OUR BUSINESS MODEL ### ...we aim to grow our diversified revenue streams... By developing, owning and managing the rights to content, ITV is able to maximise the value of its programme brands across ITV Studios; Streaming and Broadcast. This ensures ITV is a more diversified business and enables it to drive value from different revenue models. ## 4. Our diversified revenue streams Original production Commercial partnerships We produce original content commissions for broadcasters and streamers We work with advertisers and advertising agencies to provide unique and (in the UK and internationally) from our production bases in the UK, the US, innovative commercial and creative partnerships and sponsorship the Netherlands, Germany, France, Italy, Australia, Spain, Israel and the opportunities that extend beyond pure spot advertising. Nordics. We have a diversified customer base, selling to free‑to‑air Pay broadcaster, pay TV operators and global streamers. We earn pay revenue from platforms in the UK by licensing our HD channels Distribution and from our online streaming services. We own the rights to a significant catalogue of programmes and formats Subscription and other consumer revenues that we sell and license to broadcasters and streamers internationally. The In the UK, we generate subscription revenue through ITVX Premium strong global demand for content provides a significant opportunity for us. (previously ITV Hub+) and BritBox UK which is also now part of ITVX Advertising Premium. Internationally, we deliver subscription revenue through our joint Our family of channels and ITVX (and previously ITV Hub) drive significant venture with the BBC, BritBox International, which is in the US, Canada, advertising revenues from the ability to deliver mass audiences and more Australia, South Africa and the Nordics. We also monetise our consumer targeted demographics on broadcast television and addressable advertising interactions through competitions, live events and merchandising. at scale. This funds our investment in the content budget. ### ...supported by... ## 5. Our risk management framework ITV operates in an increasingly complex business environment and there This also allows management and the Board to adapt the strategy to ensure arerisks to the delivery of our strategic goals and the sustainability of our that we are striking the right balance between risk‑taking and risk‑mitigation business model. Our risk management framework provides the business and that any underlying risks in the strategy are being appropriately with the tools to identify, assess, manage and continually review our risks, managed, therefore enabling the successful delivery of the strategy. We and regular reporting provides the Board with the required insight to monitor have identified the principal risks through our risk management framework our most critical Group‑level risks. and we have considered them as part of our viability assessment. ### ...to create value for... ## 6. Our key stakeholders Advertisers Audiences Broadcasters and streamers Through delivering unique scale and Through a varied, high‑quality Through delivering quality breadth of demographics, targeted content offering, which they can programming that they can then advertising opportunities at scale watch and engage with on a variety monetise through their own and innovative and creative ways of ofplatforms and channels in a businessmodels. engaging with consumers around trusted, brand safe environment. quality programme brands. Customers Citizens Our colleagues, programme Through our streaming business With our creativity and scale, ITV participants and everyone we andcompetitions, we drive canpowerfully help shape culture work with engagement and interaction forgood. Our offering of free and Through protecting, investing in and withourmuch loved brands. universally available high quality developing our talent and creating a and trusted news services, helps culture that nurtures them to be toinform UK citizens and underpin productive, commercial and creative. democratic debate. People, and their physical and mental health and safety, are our priority at ITV. Suppliers Shareholders and debt investors Legislators and regulators Through working closely with our Through a track record of creating ITV takes its responsibilities suppliers to foster good working shareholder value and delivering andobligations as a public service relationships and ensure they shareholder returns and through broadcaster (PSB) seriously. understand and comply with our atrack record of delivering strong Supplier Code of Conduct. profit to cash conversion. ITV plc Annual Report and Accounts 2022 23 STRATEGIC REPORT KEY PERFORMANCE INDICATORS (KPIS) ## Key Performance Indicators ## (KPIs) We define our KPIs to align ## ITV our performance and ### GROUP accountability to our strategic priorities. In 2021, we set out our new KPIs and 1 ### Adjusted EPS Cost savings Profit to cash ambition for 2026 for 1 ### Studios and M&E, which we conversion continue to report against. Of the KPIs outlined in this Definition Definition Definition section, the following will be Adjusted EPS represents the Cost savings are permanent This is our measure of our reported on a quarterly adjusted profit for the year savings to the business. Managing effectiveness at working capital basis: ITV Studios total attributable to each equity share. our cost base and mitigating the management. It is calculated as revenue growth, total digital | | Adjusted profit is defined as profit | impact of inflation is key as we aim | our adjusted cash flow as a | | | --- | --- | --- | --- | --- | | revenue, total streaming | | | | 1 | | | for the year attributable to equity | to run our business as efficiently | proportion of adjusted EBITA | . | hours, share of commercial shareholders after adding back as possible and fund investments 1 Adjusted cash flow , which reflects viewing and share of top exceptional items. Further in line with our strategic priorities. the cash generation of our 1,000 commercial adjustments include amortisation underlying business, is calculated Performance broadcast TV programmes. and impairment of assets acquired on our statutory cash generated We delivered £23 million of All other KPIs outlined in through business combinations, from operations and adjusted for permanent cost savings in this section will be reported net financing costs and the tax exceptional items, net of capex on 2022,which is ahead of the on a six‑month basis. effects relating to these items. property, plant and equipment and £17million target. intangible assets, and including It reflects the business Since 2018, we have delivered the cash impact of high‑end performance of the Group in a acumulative £106 million of production tax credits. consistent manner and in line with costsavings. how the business is managed and Performance measured on a day‑to‑day basis. We will deliver an additional £50 Profit to cash conversion was 75% million of cost savings by 2026. In in the year. While we continue to Performance total, we will deliver over £150 manage our working capital tightly, Adjusted EPS decreased by 14% million of cost savings between profit to cash conversion was from 15.3p to 13.2p. Continued 2018 and 2026. lower in 2022. This is as a result of strong growth in ITV Studios our growing Studios business and adjusted EBITA up 22%, was offset the timing of deliveries. In addition, by a decline in total advertising it reflects the increased revenues (TAR) down 1%, ITVX commissions for ITVX where we investment and declining SDN and have taken delivery of interactive revenues, down 21% programmes but not yet made and 17% respectively. them available on the platform. This was partly offset by our strong TAR revenues in 2022 and tight working capital management. | 2022 | 2022 | 2022 | | --- | --- | --- | | 13.2p | £106m | 75% | | ‑14% on 2021 | cumulative savings since 2018 | | | | 2026 Target | 2026 Target | | | Deliver over £150 million of | Maintain at around 85% | cumulative savings between 2018 and 2026 | | | | 2020 | 10.9 | | 2020 | | 138 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 2021 | | 15.3 | 2021 | 80 | | | | | | 2022 13.2 | | | 2022 | 75 | | | 2019 2019 | 87 | 13.9 | | | | | | | 1. A full reconciliation between our adjusted and statutory results is provided in the APMs section 24 ITV plc Annual Report and Accounts 2022 STRATEGIC REPORT KEY PERFORMANCE INDICATORS (KPIS) ## Expand ### UK AND GLOBAL PRODUCTION | ITV Studios total | | ITV Studios adjusted | | Total high‑end | Number of formats | | --- | --- | --- | --- | --- | --- | | | 2 | | 2 | | | | revenue growth | | EBITA margin % | | scriptedhours | sold in three or more | ### countries Definition Definition Definition Definition ITV Studios total revenue This is the key profitability Total high‑end scripted hours is an The Studios business is focused on measures the scale and success of measure used across the ITV important measure of the success maximising unscripted value by our global studios business. It Studios business. The profile of of our strategy to grow our global both protecting and expanding includes revenues from adjusted EBITA margin differs for scripted business. High‑end existing formats and creating new programmes sold to M&E, which as production and distribution scripted hours include new formats that travel internationally. a vertically integrated producer activities, and further varies with commissions or returning A good measure of international broadcaster and streamer, is an each production due to genre, franchises that have a higher cost success is when a format is important part of our business. customer type and maturity. per hour than continuing drama. commissioned in three or more Adjusted earnings before interest, High‑end scripted drama is countries in the year. Spin‑offs Performance tax and amortisation (EBITA) is important as it is one of the fastest such as Beat the Chasers are ITV Studios total revenue grew 19% calculated by adding back growing segments of the content considered distinct to the original to £2,096 million. | | exceptional items and including | | market. These dramas are sold to | format (i.e. The Chase) for the | | --- | --- | --- | --- | --- | | Total organic revenue at constant | | 2 | global streamers, pay platforms or | purpose of this indicator. | | | high‑end production tax credits | . It | | | | currency (which excludes | | | free‑to‑air broadcasters, where | | reflects the underlying Performance acquisitions and assumes they are expected to perform well performance of the business and The number of formats sold in exchange rates remain consistent with viewers in their domestic provides a more meaningful three or more countries increased with 2021) was up 14%. There was a market, as well as having comparison of how the business is to 19 formats. Recent formats that £56 million favourable currency international distribution appeal. managed and measured on a have sold in three or more impact in the year. day‑to‑day basis. The margin is Performance countries include My Mom, Your calculated based on ITV Studios The number of high‑end scripted Dad; Make Love Fake Love; and total revenue. hours produced by ITV Studios Game of Chefs. increased by 58% to 276 hours Performance driven by titles such as The Outlaws ITV Studios adjusted EBITA margin and Maternal in the UK, and was 12.4% (2021: 12.1%). Margins internationally, titles such as Baby continue to be impacted by Fever from Apple Tree Productions incremental costs associated with and Petra from Cattleya. health and safety protocols, as well as inflationary pressures facing the production industry; these have been partly offset by mitigation measures. | 2022 | 2022 | 2022 | 2022 | | --- | --- | --- | --- | | £2,096m | 12.4% | 276hrs | 19 formats | | +19% on 2021 | +0.3% points on 2021 | +58% on 2021 | +4 formats on 2021 | | 2026 Target | 2026 Target | 2026 Target | 2026 Target | | Grow on average at least 5% per | Return to 13% to 15% range from | Grow to 400 hours | Grow to 20 formats | | annum | 2023 onwards | | | | | 2020 | | | 1,375 | | 2020 | 11 | 2020 | 112 | | 2020 | 14 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2021 | | | | 1,760 | 2021 | 12 | 2021 | | 175 | 2021 | 15 | | | 2022 2,096 | | | | | 2022 12.4 | | 2022 276 | | | 2022 19 | | | 2019 2019 2019 2019 | 14 | 223 1,830 | 15 | | | | | | | | | | 2. A full reconciliation between our adjusted and statutory results is provided in the APMs section ITV plc Annual Report and Accounts 2022 25 STRATEGIC REPORT KEY PERFORMANCE INDICATORS (KPIS) CONTINUED ## Expand M&E BritBox ### UK AND GLOBAL SUPERCHARGE STREAMING AND OPTIMISE BROADCAST INTERNATIONAL ### PRODUCTION | % of ITV Studios total | Total digital revenue UK subscribers Total streaming hours Monthly active users | | Share of top 1,000 | Share of commercial | Total subscribers | | --- | --- | --- | --- | --- | --- | | revenue from | | (MAU) | commercial broadcast | viewing | | | streaming platforms | | | TV programmes | | | | Definition | Definition | Definition | Definition | Definition | Definition | Definition | Definition | | --- | --- | --- | --- | --- | --- | --- | --- | | In the medium‑term, the key | Total digital revenue is an | UK subscribers captures total | Driving digital viewing by attracting | Monthly active users captures the | Continuing to deliver significant | Maintaining and growing our | The number of BritBox | | driver of growth across the overall | important measure of the | UKsubscriptions (including free | new viewers and enticing all our | average number of registered | audience scale is important to | strong competitive position in the | International subscribers | | content market is expected to be | acceleration of our digital strategy | trials). Prior to the launch of ITVX, | viewers to watch more ITV content | users throughout the year who | M&E’s overall success as ITV has | free‑to‑air market is vital for the | captures total global | | significant investment by | as we supercharge streaming. It | this included ITV Hub+ and | is key to our strategy. Total | accessed our owned and operated | aunique selling proposition being | M&E business to maximise its | subscriptions (excluding UK, | | streamers. The percentage of ITV | includes digital advertising | BritBox UK subscriptions. From | streaming hours measures the | on demand platforms each month. | one of the only places to reach | advertising revenues. ITV Family | including free trials). It is an | | Studios total revenue from | revenue and subscription revenue | December 2022 onwards, this | total number of hours that viewers | It is an important measure because | mass simultaneous commercial | share of commercial viewing is the | important measure of the scale | | streaming platforms is an | (excluding BritBox International | measure includes subscriptions | spent watching ITV across all | advertisers want to reach as many | audiences. This KPI measures | measure of this. ITV Family share | and reach of our international | | important measure to | subscription revenue) as well as | toITVX’s ad‑free premium tier as | streaming platforms. This figure | different people as possible. | ITV’s proportion of the top 1,000 | of commercial viewing is the total | subscription offering. BritBox | | demonstrate the extent to which | linear addressable revenue, digital | well as standalone BritBox UK | includes both ad‑funded and | | commercial broadcast TV | viewing of audiences over the year | International is a joint venture | Performance the business is taking advantage sponsorship and partnership subscriptions. It is an important subscription streaming. programmes, as measured by achieved by ITV’s family of between BBC Studios and ITV. Monthly active users grew 6%* to | of this growth globally and further | revenue, ITV Win and any other | measure of how successfully we | | | BARB based on viewing figures. | channels as a proportion of all | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Performance | 10.5 million. The return of popular | | | Performance | | diversifying its customer base. | revenues from digital business | provide a clear, compelling and | | | This includes TV viewing from | commercial broadcast TV viewing | | | | | | Total streaming hours increased | entertainment shows such as | | | Total subscribers grew by 25% to | | See earlier KPIs for definition of | ventures. | differentiated subscription offering. | | | transmission and seven days | in the UK. | | | | | | 9% to 1,139 million hours. This | Love Island, I’m A Celebrity…Get | | | 3.0 million. BritBox International | | ITV Studios total revenue. | | | | | post‑transmission on catch up, | | | | | Performance | Performance | growth was driven by our strong | Me Out Of Here! and the FIFA | | Performance | isnow available across eight | aswell as six weeks prior to the Performance Total digital revenue grew 18% Total UK subscribers as at content offering, such as Love World Cup tournament brought Share of commercial viewing countries, following the launch transmission window. It excludes The percentage of ITV Studios to£411 million. The growth was 31December2022, increased 17% Island, I’m A Celebrity…Get Me Out record‑breaking viewers to our increased to 33.8%. Our share inthe Nordics (made up of programmes with a duration of total revenue from streaming largely driven by digital advertising year‑on‑year. Growth came from Of Here!, and the FIFA World Cup. digital platforms. These live grew across our family of Sweden, Denmark, Finland and