ITV
Annual Report 2022

Plain-text annual report

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 Group external revenue1 Statutory EPS £3,728m +8% (2021: £3,453m) Adjusted EPS 13.2p ‑14% (2021: 15.3p) 10.7p +14% (2021: 9.4p) Dividend 5.0p +52% (2021: 3.3p) Group adjusted EBITA2 Net debt3 £717m ‑12% (2021: £813m) £623m (2021: £414m) Statutory operating profit £519m 0% (2021: £519m) Leverage3 0.8x (2021: 0.5x) Notes Alternative Performance Measures (APMs) We use both statutory and adjusted measures in our Strategic Report. The latter, in management’s view, reflects the underlying performance of the business and provides a more meaningful comparison of how the business is managed and measured day‑to‑day. A full reconciliation between our statutory and adjusted results is provided in our Alternative Performance Measures section from page 57. Our KPIs (which are based on adjusted metrics) are set out from page 24. 1. The Strategic Report also refers to total revenue, which includes all ITV revenue, both internal and external. 2. EBITA before exceptional items has been adjusted to reflect the inclusion of production tax credits (‘adjusted EBITA’). 3. Net debt includes IFRS 16 lease liabilities. Leverage is net debt to adjusted EBITDA. Strategic Report The Strategic Report explains in detail how we have performed this year and sets out, amongst other things, a fair review of the business, a balanced and comprehensive analysis of our performance, the use of key performance indicators to explain the progress we have made, a description of the principal risks and uncertainties facing the Company, and an indication of potential future developments. The Strategic Report is prepared in line with the relevant provisions of the Companies Act 2006 and the Company has had regard to the guidance issued by the Financial Reporting Council. It is intended to provide shareholders and other stakeholders with a better understanding of the Company, of its position in the markets within which it operates, and of its prospects. In setting out the Company’s main risks and uncertainties and throughout, this report and accounts contains statements that are based on knowledge and information available at the date of preparation of the Strategic Report, and what are believed to be reasonable judgements, and therefore cannot be considered as indications of likelihood or certainty. A wide range of factors may cause the actual outcomes and results to differ materially from those contained within, or implied by, the various forward‑looking statements in this Annual Report and Accounts. None of these statements should be construed as a profit forecast. Corporate website We maintain a corporate website at www.itvplc.com containing our financial results and a wide range of information of interest to all stakeholders, including institutional and private investors. Further reading Social Purpose Impact Report Read more about our Social Purpose Impact reporting here www.itvplc.com/ socialpurpose/ Pay Gap Report Read more about our Pay Gap reporting here www.itvplc.com/ investors/governance 24 2 4 6 Strategic Report 2022 Highlights ITV at a Glance Chairman’s Statement Chief Executive’s 8 Report 14 Investor Proposition 16 Market Review 20 Our Strategy Our Business Model 22 Key Performance Indicators (KPIs) Operating and Financial Performance Review Social Purpose Our People Alternative Performance Measures Finance Review Our Commitment to Section 172(1) Non‑Financial and Sustainability Information Statement Risks and Uncertainties Task Force on Climate‑related 28 44 54 60 69 71 66 57 Financial Disclosures (TCFD) 85 Governance Chairman’s Governance Statement Board of Directors Management Board Corporate Governance Nominations Committee Report Audit and Risk Committee Report Remuneration Committee Report Directors’ Report Financial Statements Financial Statements Independent Auditor’s Report Primary Statements ITV plc Company Financial Statements Subsidiary undertakings and investments 96 98 100 102 122 125 137 158 163 164 172 245 255 Additional Information 259 Glossary ITV plc Annual Report and Accounts 2022 1 S T R A T E G I C R E P O R T 2 0 2 2 H G H L I G H T S I 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 The Masked Singer The final was watched by 7.5 million viewers with a peak audience of 8.8 million viewers, and a 16‑34 audience of over a million March £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 April June Love Island The eighth series of the dating show was ITV’s most‑streamed title of 2022 with over 270 million streams across the series. Love Island has now travelled to 26 territories internationally Soccer Aid Soccer Aid for UNICEF 2022 broke previous records, raising an incredible £15.7 million to help children all over the world. The match had a peak of 4.3 million viewers Concert for Ukraine Broadcast on ITV, the televised concert raised more than £13.4 million for the humanitarian appeal in Ukraine May The BAFTAs 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, Ant and Dec’s Saturday Night Takeaway and Coronation Street 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 Big Brother ITV announce that Big Brother, the global television phenomenon, will make its much anticipated return to UK television on ITV2 and ITVX in 2023 S T R A T E G I C R E P O R T 2 0 2 2 H G H L I G H T S I November Record viewing ITV1 records its highest weekly viewing share in 20 years, with a 44% share of commercial broadcast viewing across the last week of 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 Emmerdale celebrates its 50th birthday. It is the UK’s second largest Soap, after Coronation Street, delivering average audiences of 4.6 million per episode My Mom, Your Dad New reality dating format, My Mom, Your Dad, is commissioned in the UK, Australia and Sweden. Together with seven other existing territories, this brings the total number of commissions of the format to ten in its first year Fresh Cuts ITV launches Fresh Cuts series for Black History Month 2022, with five up‑and‑coming Black filmmakers creating films for the strand ITVX ITVX, ITV’s new, free, ad‑funded streaming platform, launches with new and exclusive shows, such as Litvinenko; natural history series, A Year on Planet Earth; and teen drama, Tell Me Everything; all produced by ITV Studios labels. Streams for ITVX launch week were up 138% (compared to ITV streaming platforms at the same time in the prior year) FIFA World Cup The England v France FIFA World Cup match attracts a peak of 23 million viewers, making it the most watched programme of the year on any channel and delivering ITV’s best Saturday night on record September Hell’s Kitchen Season 21 of Hell’s Kitchen USA, the reality cooking series, premieres on Fox. Hell’s Kitchen has travelled to 25 territories to date ITV plc Annual Report and Accounts 2022 3 S T R A T E G I C R E P O R T I T V A T A G L A N C E ITV at a Glance ITV is a vertically integrated producer broadcaster and streamer, consisting of ITV Studios and Media & Entertainment (M&E). ITV Studios is a diversified global production business which creates, owns and distributes high‑quality scripted and unscripted content for broadcasters and platform owners in the UK and internationally. Through M&E, we distribute content across our ad‑funded linear channels and ITVX, our new free ad‑supported streaming platform. The integration of these two businesses has many advantages, including providing a base of core commissions for ITV Studios, being an attractive destination for talent and offering advertisers a unique opportunity to integrate their brand into our shows. I’m A Celebrity...Get Me Out of Here! returned to the Australian jungle in 2022, achieving the biggest audience for the final since 2018, with over 12 million viewers ITV Studios One of the biggest global creators, producers and distributors in the world 60% of ITV Studios total revenue and 84% of ITV Studios external revenue is from outside the UK >60 labels across 13 countries supplying over 1,000 customers 285+ unique formats across our format catalogues 90,000+ hours of active content in our catalogue We have built significant scale globally; we are one of the biggest independent producers of TV and streaming content in the world and have a production presence in six out of the top ten largest TV content markets. We create, produce, and distribute a broad range of programmes, including drama, entertainment and factual. Our customer base is diverse, producing for international television broadcasters and global streaming platforms. ITV Studios creates and produces content across 13 countries, while our global formats and distribution business sells, commercialises and distributes over 285 unique formats and over 90,000 hours of finished programmes worldwide. ITV Studios UK ITV Studios UK is the largest producer in the UK. We have 29 labels and create and produce programming across a diverse range of genres, for ITV channels and ITVX, and other UK public service broadcasters (PSBs), including the BBC, Channel 4, Channel 5, along with global streaming platforms. ITV Studios US ITV Studios US creates and produces content for all the major networks, cable channels and streaming platforms across the US. The business has two divisions: ITV America, which develops and produces unscripted content and has a portfolio of successful formats and returning series; and ITV Studios America, which produces high‑end scripted programming with the potential to travel and build international appeal. ITV Studios International ITV Studios also operates in the Netherlands, Germany, France, Italy, Spain, Israel, the Nordics and Australia, producing scripted and unscripted content for local broadcasters and streaming platforms. This is either locally created content, or formats that have been created elsewhere by ITV, primarily in the UK, the Netherlands and in Israel. Global formats and distribution Global formats focus on the sale and exploitation of unscripted formats internationally and ITV is one of the largest format distributors worldwide. It also generates revenue from licensing our brands for games, live events and merchandise. The distribution business focuses on the international distribution of ITV Studios scripted and unscripted content and third‑party content to broadcasters and platforms internationally. Within this business, we also finance ITV and third‑parties productions to acquire global distribution rights. 4 ITV plc Annual Report and Accounts 2022 ITV total revenue ITV Group adjusted EBITA* ITV Studios M&E digital revenues ITV Studios M&E £2,096m (2021: £1,760m) £411m (2021: £347m) £259m (2021: £213m**) £464m (2021: £598m) M&E non‑digital advertising revenues M&E other revenues * £1,588m (2021: £1,664m) £250m (2021: £271m) A full reconciliation between our adjusted and statutory numbers is included in our APMs on page 57 ** This figure has been restated. Please see section 2.1 of the Financial Statements for further detail S T R A T E G I C R E P O R T I T V A T A G L A N C E Litvinenko launched on ITVX in December 2022. It is based on the true story of the poisoning of Russian spy, Alexander Litvinenko Media & Entertainment 1,139m total streaming hours (2021: 1,048m) 10.5m monthly active users (MAUs) (2021: 9.9m) 33.8% share of commercial viewing for the ITV Family (2021: 33.1%) Media & Entertainment (M&E) is the home of ITV’s family of channels and platforms – the largest family of free‑to‑air commercial channels in the UK, It is made up of two parts – Streaming and Broadcast. Streaming ITVX, our new, free, ad‑funded streaming platform launched in Q4 2022 and supercharges our streaming proposition. ITVX combines ITV Hub, ITV Hub+ and BritBox UK into an integrated free, ad‑funded platform, with a compelling subscription‑funded, ad‑free premium tier. It will significantly strengthen our offering to viewers – making it a destination rather than a catch up service and offers advertisers targeted audiences at scale through Planet V. Planet V, our scaled programmatic addressable advertising platform, is the UK’s second‑largest programmatic video advertising platform, after Google. Broadcast Broadcast is the home of our linear channels and continues to deliver ITV’s USP of mass simultaneous reach and live unmissable content. ITV’s family of channels are advertiser‑funded and consist of ITV1, ITV2, ITV3, ITV4, ITVBe, and CITV. ITV1 offers unique audience scale and simultaneous reach to television advertisers, whilst our other channels offer more targeted demographics. These revenue streams enable our investment in high‑quality programming across a range of genres, which underpins the success of both Broadcast and Streaming. ITVX has launched and will continue to launch at least one new and exclusive show every week, including dramas such as Love and Death, comedy such as Changing Ends and documentaries such as Boris Becker: Game Set and Match. ITVX has one of the UK’s largest free film libraries with over 250 titles and over 200 series available at launch, as well as 20 FAST (free ad‑supported TV) channels and ITV’s six linear channels. As well as the free content available on ITVX, ITVX’s premium subscription tier offers access to exclusive BritBox UK content – the largest collection of British box sets – all ad‑free. We also generate revenue through in‑programme competitions and voting through ITV Win, our digital competitions platform. In addition to BritBox UK, ITV has a subscription streaming joint venture with the BBC, 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 S T R A T E G I C R E P O R T C H A I ’ R M A N S S T A T E M E N T 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 corporate citizens is growing all the time and I have been very pleased to find in ITV a culture that truly believes in it and not only wants to meet this expectation but to lead it. Our purpose is to entertain and inform and we are very good at this, engaging millions of people with the highest quality content. But we also recognise that we have an ability to influence social attitudes and individual actions like few other commercial organisations can. This is a privileged position and one the Company is mindful not to overreach but we can use the power of our communication for good and we take active steps to do so, when appropriate and when we see the opportunity. In 2022 for example, 47 million positive actions to improve the UK’s physical and mental health can be attributed to ITV campaigns on these two key societal issues. Or, on the environmental agenda, the Company was proud to announce its Climate Content Pledge which seeks to inspire viewers to take action to reduce their personal climate impact. This initiative, along with our work to improve corporate governance and transparency on climate action helped earn ITV a coveted ‘A’ rating in 2022 from the internationally renowned Climate Disclosure Project (CDP). Andrew Cosslett CBE Chair 6 ITV plc Annual Report and Accounts 2022 S T R A T E G I C R E P O R T C H A I ’ R M A N S S T A T E M E N T 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 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 19% 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. 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. 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 Andrew Cosslett CBE Chair of the Board ITV plc Annual Report and Accounts 2022 7 S T R A T E G I C R E P O R T C H I E F E X E C U T I ’ V E S S T A T E M E N T 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. In the UK we continued to entertain and inform the nation with a strong slate of drama, entertainment and news programming. And as a Public Service Broadcaster (PSB) we contribute to our culture and society, whether creating shared moments, highlighting difficult issues or running campaigns for mental and physical wellbeing. The market continues to evolve rapidly, with growing demand globally for quality content; changing viewing habits; and the desire of advertisers for both mass reach and data‑led addressable advertising. We are confident in our ability to execute our More Than TV strategy which will ensure we capitalise on the opportunities and mitigate the risks of this evolving market. We continued to grow, strengthen and diversify ITV Studios including through the acquisition of Plimsoll Productions, a leading natural history producer. In Media & Entertainment (M&E) the launch of ITVX, our new free, ad‑funded streaming service was received extremely well by viewers and advertisers. We also continued to invest behind Planet V, 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 The Thief, His Wife and The Canoe was one of the UK’s top five most‑watched dramas in 2022 ITVX launched successfully in Q4 2022, with a multichannel marketing campaign to mark the launch S T R A T E G I C R E P O R T C H I E F E X E C U T I ’ V E S S T A T E M E N T Financial highlights Both ITV Studios and M&E performed better in 2022 than we expected at the start of the year. 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 in ITV’s history and within this digital advertising revenues were up 17%. Total digital revenues were up 18% at £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 balance sheet is robust with net debt at 31 December 2022 of £623 million and our net debt to adjusted EBITDA was 0.8x (31 December 2021: 0.5x). Our strategic vision The Board keeps the More Than TV strategy under regular review to ensure it is responsive to market changes. The Management Board and I are totally focused on executing our More Than TV strategy which will create a more valuable digital media and For each of these priorities we have set key performance indicators and targets to deliver by 2026 and with the good progress we have made to date, we are on track and confident we can deliver against this. We are viewer and customer driven and every decision will combine our creativity and data insight to achieve this. ITV has a unique market position as a global and diversified vertically integrated producer broadcaster and streamer with content central to everything we do. This gives us a real competitive advantage in achieving our vision. It provides ITV Studios with a base of core commissions and a significant promotional engine for its content, and enables cross‑promotion and monetisation of our intellectual property (IP) across all our business models. It secures access to great content for ITV’s channels and streaming business; it enables us to offer advertisers a unique opportunity to integrate their brands into our shows; and very importantly, it helps us attract and retain creative talent, which is critical in a successful creative business. entertainment company and deliver returns to shareholders. Our vision for 2026 is to be a leader in UK streaming, and an expanding force in UK and global content. We are focused on three priorities to deliver this vision: • Expand our UK and global production business • Supercharge our Streaming business, and • Optimise our Broadcast business We are mindful of the macroeconomic uncertainty and remain focused on tightly managing our costs and cash flow. Our priority remains to invest in our key assets and value drivers in line with our strategic priorities, balancing this with our commitment to investment grade metrics over the medium term and returns to shareholders. I am incredibly grateful for the hard work and commitment all our colleagues show – it makes ITV the creative, collaborative and commercial business that we are. Reflecting the Board’s confidence in the business and its strategy, as well as continued strong cash 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 Our newest labels created through our recent talent deals have delivered an impressive slate of programmes, including Nolly from Quay Street Productions and You & Me from Happy Prince. As a creator, owner and distributor of content, ITV can maximise the global value of its IP through optimising the windowing of content across different distribution channels and customers. It has built one of the largest and broadest catalogues in the 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 of total revenues from streaming platforms to 22%, from 13% in 2021. Following this success we have increased our 2026 target to 30%, from 25%. Whilst streamers’ content spend is not expected to grow at the same rate as in recent years, we still expect total content spend in the global market to continue to grow in the medium term by around 2 to 3%. Media & Entertainment (M&E) ITV is the largest commercial broadcaster in the UK with unrivalled audience size and reach. Its share of viewing amongst commercial broadcasters is 33.8%. In 2022, it delivered over 90% of the top 1,000 audiences (which are key to increasingly scarce brand building mass reach) and its scale and quality enables it to effectively compete for viewing and command a premium from advertisers. ITV has an 18% share of video viewing amongst broadcasters and streamers in the UK (across the four major viewing screens – TV, mobile, PC and iPads) which is broadly the same as all the streaming services combined. Endeavour returned to screens in February 2023 for its ninth and final season. It is produced by Mammoth Screen, an ITV Studios label, and first aired in 2012. It has since been sold to over 200 countries worldwide S T R A T E G I C R E P O R T C H I E F E X E C U T I ’ V E S S T A T E M E N T C O N T I N U E D Dancing On Ice is produced by Lifted Entertainment, an ITV Studios label and returned to screens for its 15th series in January 2023 ITV Studios ITV Studios is a leading global producer of TV shows operating in 13 countries, across 60+ different labels. It is also diversified by content genre and type of customer. ITV Studios is the number one producer in the UK and is one of the top three international producers in the majority of the markets in which it operates, which gives it scale and has enabled it to build relationships with the key content buyers and leading creative talent in those markets. TV production continues to be a growing market and ITV Studios, due to its size and diversity, has grown consistently ahead of the market and will continue to do so. Its scale and quality also gives it the opportunity to derive industry‑leading margins. From this strong position, we expect ITV Studios to continue to grow ahead of the market over the medium term, delivering at least 5% revenue growth on average per annum, at a margin of 13 to 15%, although it will be at the lower end of this range in the shorter term due to increased production costs and the growth in our scripted production. 10 ITV plc Annual Report and Accounts 2022 To deliver this growth we are focused on four growth drivers to ensure ITV Studios is well placed to take advantage of the growing demand for quality content: • growing our scripted business to meet the significant demand for scripted content globally • growing our global formats business in order to maximise the value of existing formats and creating new global formats • further diversifying our customer base to capture the growth in content spend from local and global streaming platforms • continuing to attract and retain leading talent ITV’s federated label model and the strong connection with ITV M&E, (and therefore access to ITV‘s mass reach and powerful promotional engine in the UK), makes it a very attractive home for top creative talent and we are proud to be able to continue to attract the best talent in the market, including in 2022 welcoming Plimsoll Productions, Lingo Pictures (an international scripted producer) and Ben Stephenson, who set up an international scripted label, Poison Pen Studios, in ITV Studios. ITV’s leading position in linear TV advertising has enabled the Group to build a substantial national streaming position with ITV Hub and BritBox UK, and now ITVX. ITVX, our ad‑funded, free to watch service was successfully launched in Q4 2022 to a positive reception from viewers and advertisers. ITVX has a significant volume of high‑quality original exclusive programming; one of the UK’s largest free film libraries; 20 new FAST channels and all ITV broadcast channels, with live sport and entertainment. ITVX has a premium subscription tier where consumers can watch all programmes plus BritBox UK (ITV and BBC library content) ad free. In total ITVX has 19,000 hours of content. In 2022, ITV increased monthly active users by 6% to 10.5 million; total streaming hours by 9%; total monetisable streaming hours by 18% and UK subscribers by 17% to 1.4 million. Over the last four years, ITV has invested in data and technology resource and built its own proprietary ad tech stack, branded Planet V, which enables advertisers to buy highly targeted advertising. As a result, ITV and ITVX are well positioned to capitalise on their unique strengths to compete with newer entrants, such as YouTube and global subscription services: ITV has deep relationships with agencies and advertisers; brand safe and measured advertising; a track record of commissioning and producing content which appeals to UK audiences; and over 95% prompted awareness for ITV amongst UK viewers. The advertising market has grown consistently in the UK (delivering a CAGR of 7% over the last ten years). This growth has been primarily driven by online. Balthazar is a French crime thriller produced by Tetra Media Studios, an ITV Studios label. The fifth series launched on TF1 in January 2023 Blackwater is a Scandinavian drama series produced by Apple Tree Productions, an ITV Studios label, for SVT Within this overall UK market, linear TV advertising has been resilient, despite a gradual decline in audiences. In fact, ITV’s ad revenue reached an all time high in 2021, and 2022 was the second highest advertising revenue year ever despite the impact of the conflict in Ukraine and cost of living crisis. This reflects the unique role mass reach plays in the advertising mix with its ability to build brands and drive performance and we expect that the cost of advertising will rise as mass reach becomes increasingly scarce. While in the short term the advertising outlook is challenging, we expect linear advertising revenues to remain resilient and continue to be highly cash generative. This underpins our continued growth investment in ITVX and Studios, which power ITV. 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. S T R A T E G I C R E P O R T C H I E F E X E C U T I ’ V E S S T A T E M E N T C O N T I N U E D 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 advertising and by new to ITV advertisers, using targeted only, all using our first party data (and their own first party data), with gold standard measurement. Between the 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 advertising market. ITV plc Annual Report and Accounts 2022 11 Our Purpose and Social Purpose priorities Our purpose is to entertain and connect with millions of people globally, reflecting and shaping culture with brilliant content and creativity. Our Environmental, Social and Governance agenda is an essential part of our purpose and our ability to deliver our goals. ITV is committed to driving positive social change and is uniquely placed to do this on and off‑screen through our extensive reach, supported by rigorous targets and social purpose priorities – Better Health, Diversity & Inclusion, Climate Action and Giving Back. Our audiences have had a lot to deal with this year. The physical and mental health pressures caused by the pandemic are ongoing and becoming exacerbated by the mounting burden of the cost of living. This has been front of mind for us when developing campaigns and initiatives that can really make an impact, such as Britain Get Talking which encourages millions to take action and ensure people get the help they need. Climate Action remains a priority which means ensuring we significantly reduce our emissions in line with our science‑based targets by 2030 and achieve Net Zero by 2050 in how we make, broadcast and stream our shows, but also using our reach to inform and inspire audiences to make greener choices. Our Diversity and Inclusion Acceleration Plan is focused on creating and showcasing content that reflects modern audiences and ensuring there is equality of opportunity and that ITV is an inclusive place to work. We’ve championed diversity across our biggest shows and created new opportunities for underrepresented groups in our workforce, from senior leadership programmes like Amplify, to Kickstart, a six‑month placement scheme for those coming into the industry. As part of our Giving Back priority, we are very pleased to have been able to play a part in helping those affected around the world by tragic humanitarian circumstances. Our Concert for Ukraine and annual charity football match, Soccer Aid for UNICEF, raised a combined total of over £29 million thanks to the generosity of our viewers, advertisers and our own colleagues. S T R A T E G I C R E P O R T C H I E F E X E C U T I ’ V E S S T A T E M E N T C O N T I N U E D 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 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 evidence‑based regulation of advertising, to ensure that any economic impact is 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. S T R A T E G I C R E P O R T C H I E F E X E C U T I ’ V E S S T A T E M E N T C O N T I N U E D 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 creating shareholder value. The combination of a scaled and expanding global TV production business, a resilient linear TV advertising business, a rapidly growing digital targeted TV advertising business and a unique vertically integrated producer broadcaster and streamer model means that ITV is growing and diversifying, reducing its dependence on the linear business. While linear will continue to have an important role in the advertising mix, by 2026 we expect around two thirds of ITV’s total revenues to come from our growth drivers – ITV Studios and M&E digital revenues. This is expected to drive increased profits, from an inflection point in 2023, creating a more valuable business, underpinned by a strong balance sheet, continued investment in organic and inorganic growth and a regular and growing dividend. Carolyn McCall Chief Executive Women’s Rugby World Cup aired on ITV and ITV4, with all games shown live on a UK free‑to‑air broadcaster for the first time A Royal Grand Design sees the reigning monarch lead the renovation of Dumfries House over the space of a decade on ITV1 Colleagues It is easy to say that colleagues are at the heart of our success. I hope they all see, through our actions that this is the case. One of the best parts of my role is meeting ITV colleagues from all areas, and across the very strong regions of the UK and also in our offices internationally. Their input and feedback is invaluable, and we act on that frequently. I am incredibly grateful for the hard work and commitment all our colleagues show – it makes ITV the creative, collaborative and commercial business that we are. We have achieved a huge amount in 2022 which would not be possible without them. We are committed to investing in and building a high performing, agile and diverse workforce. We continue to invest in their development through a range of online and in person workshops to build leadership capability and support personal skills development, wellbeing and resilience for all employees. Duty of Care Supporting the mental and physical health and safety of colleagues and others who work with ITV and those participating in our productions, is a key priority. I chair the Duty of Care Operating Board which meets regularly. With the help of external experts, it provides guidance around best practice and evolves our approach to mental health and wellbeing. The Duty of Care team is in place to provide expertise to support the business. A key priority in 2022 was to ensure our Speaking Up policy provided the right channels and support for our colleagues, which remains a focus for 2023. ITV continues to monitor and respond to historical issues to further strengthen our Duty of Care policies. In the Netherlands, ITV has appointed a Dutch law firm to conduct an external investigation into allegations of inappropriate behaviour surrounding The Voice of Holland prior to 2020. In the UK, ITV will be giving evidence and cooperating with 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 Investor Proposition Ant and Dec’s Saturday Night Takeaway returns for its 19th series in 2023 S T R A T E G I C R E P O R T I N V E S T O R P R O P O S I T I O N 14 ITV plc Annual Report and Accounts 2022 1. Unique market position ITV is a leading global and diversified vertically integrated producer broadcaster and streamer which gives us a real competitive advantage. There are several key pillars to ITV’s strong market position and its ability to successfully execute its strategy: 1. ITV Studios is a scaled, TV and streaming content production business, diversified by genre, by customer and geography within the growing global content market – UK’s largest commercial producer and one of the world’s largest independent producers enabling it to build relationships with key content buyers and leading creative talent – Global distribution network with a library of +90,000 hours of content rights and we are one of the largest global distributors of unscripted formats – This enables ITV Studios to grow ahead of the market and deliver industry leading margins 2. ITV M&E, with quality content at its core, offers a strong viewer proposition across live and streaming, and an integrated advertising proposition offering both mass reach audiences and targeted addressable audiences at scale. As a vertically integrated business it also offers advertisers the unique opportunity to integrate their brands into our shows – ITV is the largest commercial broadcaster in the UK, with unrivalled audience size and reach. In 2022 it delivered 93% of the top 1,000 commercial broadcast programmes on TV and had a 33.8% share of commercial viewing – ITVX, our new, free, ad‑funded streaming service with 19,000 hours of content including high‑quality original exclusive programming 3. ITV has significant competitive advantages in the large and growing digital advertising market supported by our data and tech capabilities – One of the top data sets in the UK with 37 million registered user accounts on ITVX – Planet V, our proprietary, self‑service, 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 2. 3. 4. Clear strategy providing a Strong 2022 operating Financial strength and solid platform for execution performance with strategic cash generation and operational momentum ITV’s 2026 vision is to be a leader in UK ITV’s model delivered strong revenues ITV retains a stable investment grade streaming and an expanding global force in 2022. balance sheet supported by strong and • ITV Studios continued to outperform reliable cash generation to enable ITV the market, growing total revenues at to invest behind its key priorities. ITV maintains tight financial discipline with a focus on efficiencies. We have achieved £106 million of cumulative cost savings in 2022 compared to 2018 with an incremental £50 million of permanent savings targeted by 2026. The Board is committed to an ordinary dividend of at least 5.0p per annum, which will grow over time. Surplus cash will be used for accretive, value‑adding M&A or further capital returns. 19% and its revenues are now 15% above 2019 levels. It has increased its high‑end scripted hours by 58%; increased the number of formats sold in three or more countries from 15 to 19; and significantly increased the percentage of revenues sold to streamers to 22%, from 13% in 2021 • M&E has delivered its second highest advertising revenues in its history, reflecting the unique role mass delivers, and continues to report strong M&E digital revenue growth, up 18%. Streaming hours were up 9%, monetisable streaming hours were up 18%, and monthly active users were up 6%, driven by significant increase in content available; improved user interface; and the successful launch of ITVX We have also been further building our data‑driven and ad tech capabilities: • 90% of all ITV’s digital ad inventory is now sold through Planet V, which has 20,000 data targeting options and three way data matching for targeted advertising, making inventory more valuable for advertisers • Planet V 2.0 which provides users with a new look, better functionality and more parameters to help build effective campaigns is now being trialled in content through: Expand Studios globally Supercharge Streaming Optimise Broadcast This will create a resilient, diversified and growing media and entertainment business. This will continue to reduce our dependence on linear advertising, with revenue from our growth drivers, ITV Studios and M&E digital revenues, expected to make up about two thirds of total revenues by 2026, up from around 50% in 2018. 1. Studios revenue is expected to grow ahead of the market and by at least 5% on average per annum by 2026. The EBITA margin will be between 13% to 15% from 2023, although at the lower end of the range in the shorter term 2. Successful launch of ITVX – our new, free, ad‑funded streaming service. It supercharges our streaming business providing viewers with a content‑rich destination rather than a catch up service and provides advertisers with valuable addressable audiences at scale. In addition it has a premium, ad‑free tier. ITVX will drive significant digital viewing and revenue growth and with our established data and analytics capabilities will drive higher‑value data‑driven pricing models and help to deliver at least £750 million of digital revenue by 2026 and double streaming viewing, double MAUs and double subscribers from 2021 to 2026 3. We expect linear advertising revenues to remain resilient and continue to be highly cash generative and underpin our continued growth investment in ITVX and ITV Studios. ITV will continue to optimise its model between broadcast and streaming, maintaining its share of commercial broadcast viewing and its unique ability to deliver mass audiences whilst growing digital streaming revenues 1. Unique market position ITV is a leading global and diversified vertically integrated producer broadcaster and streamer which gives us a real competitive advantage. There are several key pillars to ITV’s strong market position and its ability to successfully execute its strategy: 1. ITV Studios is a scaled, TV and streaming content production business, diversified by genre, by customer and geography within the growing global content market – UK’s largest commercial producer and one of the world’s largest independent producers enabling it to build relationships with key content buyers and leading creative talent – Global distribution network with a library of +90,000 hours of content rights and we are one of the largest global distributors of unscripted formats – This enables ITV Studios to grow ahead of the market and deliver industry leading margins 2. ITV M&E, with quality content at its core, offers a strong viewer proposition across live and streaming, and an integrated advertising proposition offering both mass reach audiences and targeted addressable audiences at scale. As a vertically integrated business it also offers advertisers the unique opportunity to integrate their brands into our shows – ITV is the largest commercial broadcaster in the UK, with unrivalled audience size and reach. In 2022 it delivered 93% of the top 1,000 commercial broadcast programmes on TV and had a 33.8% share of commercial viewing – ITVX, our new, free, ad‑funded streaming service with 19,000 hours of content including high‑quality original exclusive programming 3. ITV has significant competitive advantages in the large and growing digital advertising market supported by our data and tech capabilities – One of the top data sets in the UK with 37 million registered user accounts on ITVX – Planet V, our proprietary, self‑service, 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 3. Strong 2022 operating performance with strategic and operational momentum ITV’s model delivered strong revenues in 2022. • ITV Studios continued to outperform the market, growing total revenues at 19% and its revenues are now 15% above 2019 levels. It has increased its high‑end scripted hours by 58%; increased the number of formats sold in three or more countries from 15 to 19; and significantly increased the percentage of revenues sold to streamers to 22%, from 13% in 2021 • M&E has delivered its second highest advertising revenues in its history, reflecting the unique role mass delivers, and continues to report strong M&E digital revenue growth, up 18%. Streaming hours were up 9%, monetisable streaming hours were up 18%, and monthly active users were up 6%, driven by significant increase in content available; improved user interface; and the successful launch of ITVX We have also been further building our data‑driven and ad tech capabilities: • 90% of all ITV’s digital ad inventory is now sold through Planet V, which has 20,000 data targeting options and three way data matching for targeted advertising, making inventory more valuable for advertisers • Planet V 2.0 which provides users with a new look, better functionality and more parameters to help build effective campaigns is now being trialled 2. Clear strategy providing a solid platform for execution ITV’s 2026 vision is to be a leader in UK streaming and an expanding global force in content through: Expand Studios globally Supercharge Streaming Optimise Broadcast This will create a resilient, diversified and growing media and entertainment business. This will continue to reduce our dependence on linear advertising, with revenue from our growth drivers, ITV Studios and M&E digital revenues, expected to make up about two thirds of total revenues by 2026, up from around 50% in 2018. 1. Studios revenue is expected to grow ahead of the market and by at least 5% on average per annum by 2026. The EBITA margin will be between 13% to 15% from 2023, although at the lower end of the range in the shorter term 2. Successful launch of ITVX – our new, free, ad‑funded streaming service. It supercharges our streaming business providing viewers with a content‑rich destination rather than a catch up service and provides advertisers with valuable addressable audiences at scale. In addition it has a premium, ad‑free tier. ITVX will drive significant digital viewing and revenue growth and with our established data and analytics capabilities will drive higher‑value data‑driven pricing models and help to deliver at least £750 million of digital revenue by 2026 and double streaming viewing, double MAUs and double subscribers from 2021 to 2026 3. We expect linear advertising revenues to remain resilient and continue to be highly cash generative and underpin our continued growth investment in ITVX and ITV Studios. ITV will continue to optimise its model between broadcast and streaming, maintaining its share of commercial broadcast viewing and its unique ability to deliver mass audiences whilst growing digital streaming revenues S T R A T E G I C R E P O R T I N V E S T O R P R O P O S I T I O N 4. Financial strength and cash generation ITV retains a stable investment grade balance sheet supported by strong and reliable cash generation to enable ITV to invest behind its key priorities. ITV maintains tight financial discipline with a focus on efficiencies. We have achieved £106 million of cumulative cost savings in 2022 compared to 2018 with an incremental £50 million of permanent savings targeted by 2026. The Board is committed to an ordinary dividend of at least 5.0p per annum, which will grow over time. Surplus cash will be used for accretive, value‑adding M&A or further capital returns. Hell’s Kitchen USA, the reality cooking show hosted by Gordon Ramsay, returned to screens in September 2022 on FOX ITV plc Annual Report and Accounts 2022 15 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. S T R A T E G I C R E P O R T M A R K E T R E V I E W 16 ITV plc Annual Report and Accounts 2022 The Serpent is a crime drama, based on a true story. It is produced by Mammoth Screen, an ITV Studios label, for the BBC and Netflix internationally Summertime is produced by Cattleya in Italy, an ITV Studios label, for Netflix The Ipcress File is a cold war spy thriller series, available on ITVX. It is also distributed by Global Distribution, which is part of ITV Studios The Voice Kids returned for its sixth series in 2022 S T R A T E G I C R E P O R T M A R K E T R E V I E W Strong global demand for content Trend The demand for quality content from broadcasters and platform owners remains strong and we expect the global content market to continue to grow over the next five years, driven predominantly by streaming platforms. While the budgets of many free‑to‑air broadcasters (FTA) and Pay TV operators are under pressure, they are continuing to invest in their schedules, and despite the growth of streaming platforms, FTA and Pay TV are expected to remain the largest buyer segment in the market. Whilst content spend growth from streaming platforms is expected to slow compared to recent years, it will still continue to grow and is expected to make up 33% of the overall market by 2026 (Source: Ampere Analysis, Sept 2022). This includes spend on all types of content including films and sports rights. With a focus on growing subscribers against a challenging backdrop, streamers continue to demand exclusive, brand‑defining original content, including local language and library content, to meet the increased expectations of new and existing subscribers. How we are responding ITV Studios is a leading global creator, producer and distributor of content, operating in 13 countries with over 60 labels. It is diversified by content genre, customer and geography. ITV is one of the top three international producer groups in most of the markets we operate in (based on internal estimates) which gives ITV scale and has enabled us to build relationships with the major content buyers globally. ITV Studios strategy is focused on growing scale in scripted content in English and local languages to meet demand, as well as to diversify our customer base, particularly towards streaming platforms. Over the last few years, we have invested in creative development and strengthening our creative talent base across ITV Studios to help drive scripted commissions and relationships with global streaming platforms. Unscripted content remains important and we have built a healthy pipeline of returning formats which continue to grow as well as focusing on the development of new global unscripted formats. The demand for high‑quality scripted content, in particular, has increased significantly, with the global streaming platforms investing heavily to attract subscribers, using it as a tool for differentiation and prominence in an increasingly competitive global environment. This has increased competition and costs in the market, particularly for on and off‑screen talent impacting the margin for scripted content, which is generally lower than other genres. Demand for unscripted content remains strong as platforms and channels also require cost‑effective, high‑volume popular series. This content supplements the expensive scripted titles and reliably attracts mass simultaneous viewing. FTA broadcasters have chosen to resurrect old formats such as Big Brother (ITV), Survivor and Gladiators (BBC). The UK remains the dominant producer and exporter of unique unscripted formats. The US dominates scripted and is the largest content market in the world. Other key attractive creative markets include France, the Nordics, Italy, Germany, Australia, and Spain which has access to Latin American markets. Creating and owning the IP for our content is key to ITV Studios. It allows us to maximise its global value through optimising the windowing of content across different distribution channels and customers, format sales, and licensing. This contributes to our higher overall ITV Studios margin relative to our industry peers. We have built one of the industry’s largest, broadest and deepest catalogues with over 90,000 hours of content. As a vertically integrated producer broadcaster and streamer, ITV Studios also benefits from demand for its content from ITV’s linear and streaming propositions, providing M&E with a strong and secure content supply. ITV Studios continues to embed production innovation and new ways of working to help mitigate production cost inflation in the market. This includes the use of remote cloud editing, production hubs for key formats and the use of AI in production processes. See the Operating and Financial Performance Review for further detail on these areas. ITV plc Annual Report and Accounts 2022 17 S T R A T E G I C R E P O R T M A R K E T R E V I E W C O N T I N U E D Digital platforms and changing viewer habits Deep Fake Neighbour Wars is a new comedy impressions show which launched on ITVX in January 2023 In terms of total viewing, regardless of which device it is watched on (e.g. TV, mobile, PC or iPad), Broadcast TV remains the most watched platform, accounting for around 60% of an individuals average video time per day, followed by YouTube and streamers (see chart below) (Source: BARB/Thinkbox). How we are responding We recognise the viewing landscape has become increasingly competitive and fragmented, and while ITV’s linear channels continue to drive significant audiences, viewers also want the flexibility to watch an increased choice of content whenever and wherever they are. We successfully launched ITVX, our new, free, ad‑funded streaming platform in Q4 2022. ITVX significantly strengthens our offering to viewers – making it a destination rather than a catch up service – and offers both a linear live experience through its traditional channels and new FAST channels, and on demand access to weekly new exclusive original content alongside all of the linear content and a substantial archive. As well as the free content available on ITVX, ITVX’s premium subscription tier offers access to exclusive BritBox UK content – the largest collection of British box sets – all ad‑free. We will invest around £1.3 billion annually in our content budget across all our channels and platforms. We will invest in high‑quality, trusted content across a wide range of genres, including large family entertainment shows, sport, drama, factual and news which will drive simulcast viewing on ITVX and mass audiences on linear channels. In addition to our UK streaming proposition, we also have our successful BritBox International service in the US, Canada, Australia, South Africa and the Nordics. Average video time per day All individuals 4hrs 30 mins Broadcaster TV YouTube Subscription streaming 59.5% 16.4% 13.7% TikTok Online Adult video Other online video See the Operating and Financial Performance Review, and Strategy sections for further detail. 4.4% 3.1% 2.2% DVD Cinema 0.4% 0.3% Source: 2022, BARB / Broadcaster stream data / Viewers Logic/ IPA Touchpoints 2022 / Pornhub / UK Cinema Advertising Association (CAA), Office of National Statistics (ONS) Trend The viewing day has become increasingly fragmented with the entry of global subscription services, such as Netflix, Amazon Prime and Disney+; local streaming services such as Viaplay from NENT; user generated video sharing platforms such as YouTube and TikTok; and more recently ad‑funded streaming services both from large global conglomerates, such as Hulu, Pluto TV (ViacomCBS) and Tubi (FOX), and from global subscription streaming platforms such as Netflix and Disney+, launching ‘ad‑lite’ subscription tiers. These are all competing with live and streaming viewing from existing platforms. The rise in the number of platforms offers viewers increased choice and flexibility about what, how, where and when they watch content. This has significantly impacted viewing habits globally, with the COVID‑19 pandemic further accelerating some of the digital viewing trends we had previously started to see. There has been a significant increase in streaming viewing on TVs (particularly connected TVs) and non‑TV devices (such as smartphones, tablets and computers). This evolution, however, is not uniform across demographics, with younger viewers spending proportionally more time consuming content on non‑TV devices, while older demographics spend comparatively more time engaging with broadcast television. In the UK, linear viewing of Broadcast TV (which is defined as viewing of a TV set to broadcast programmes that are viewed either on the day of transmission or within seven catch‑up days. This can mean live, recorded playback or video on demand via a TV set) remains very popular and reaches 83% of the population (with a TV set) each week. And within broadcast TV viewing, live viewing made up 82% in 2022 (Source: BARB). Viewing on public service broadcasters (PSB) in the UK has remained more resilient than linear channels in other markets and is helped by the strength and investment in original content made by the PSBs, particularly the BBC and ITV. Overall usage of a TV set (including broadcast TV, streaming platforms, YouTube and games consoles) is declining, 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, dramatises the infiltration of far‑right terrorist group National Action, foiling a plot to murder an MP The Suspect is a drama series produced by World Productions, an ITV Studios label Queens for the Night aired in the UK in November 2022. ITV Studios has acquired the rights in each territory where it has an unscripted production base and distribution rights for the format and finished versions worldwide (excluding the UK)  S T R A T E G I C R E P O R T M A R K E T R E V I E W C O N T I N U E D Average video advertising time per day All individuals 17 mins Broadcaster TV YouTube TikTok 83.6% 12.2% 2.5% Other online video Cinema 1.3% 0.4% Source: 2022, BARB / comScore / Broadcaster stream data / IPA Touchpoints 2022 / Viewers logic to model OOH viewing time * YouTube ad time modelled at 4.1% of content time, TikTok ad time modelled at 3.4% of content time using agency and broadcaster data ITVX enables ITV to significantly increase digital advertising inventory and reach, offering advertisers targeted advertising at scale in a brand‑safe, trusted and measured environment. Planet V, our scaled programmatic addressable advertising platform, is the UK’s second‑largest programmatic video advertising platform, after Google. It is a self‑service platform which allows advertisers and agencies to plan and book their campaigns 24/7 using ITV’s data, which can also be blended with advertisers’ and others’ first‑party data in a GDPR compliant way. ITV has 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. The advertising market is highly competitive, with global streamers having now entered the advertising market. However, ITV has a highly experienced team that are well versed in competing with new entrants to the advertising market. We offer our advertising clients something no streamer is able to – the best of both worlds – which allows advertisers to grow their brand through the unparalleled mass simultaneous reach audience generated on ITV, whilst extending incremental reach through a targeted offering on ITVX. This is supplemented by innovative data and content advertising offerings that are unique to ITV. See the Operating and Financial Performance Review, and Strategy sections for further detail. The UK advertising market Trend The UK advertising market continues to grow, up 7% CAGR over the last ten years. In 2022, total advertising spend grew 9% year‑on‑year to £35 billion (2021: £32 billion). This growth 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 the advertising market in 2022 (2021: 88%). Linear mass reach helps advertisers build brands and drive performance. Online advertising provides advertisers with a targeted proposition, requires a lower campaign budget compared to TV, and provides brands with a quick, short‑term impact for their marketing campaign. Within online advertising, search is the largest, dominated by Google, followed by Display and Online Video, dominated by Google and Facebook. The UK advertising market, and particularly television spot advertising, has been impacted by macroeconomic uncertainty, however in 2021, ITV achieved record‑breaking advertising revenues, and 2022 advertising revenues were the second‑highest on record. Other categories such as outdoor, press and cinema advertising have not fully recovered above pre‑pandemic levels (Source: Advertising Association January 2023). While streaming viewing and advertising has grown strongly, viewing of TV (live linear, simulcast or streamed) advertising remains dominant accounting for over 80% of an individuals average video advertising viewing, and 56% for 16‑34s (see chart above) (Source: BARB/Thinkbox). How we are responding ITV’s linear television channels continue to offer unique scale and reach of all the key demographics that advertisers target, and it remains a cost‑efficient, flexible and trusted way of advertising and an important part of marketing campaigns. We have focused on developing deep strategic partnerships with our advertisers and agencies, with data‑driven insights to demonstrate the power of television. Over the last year, we have successfully brought new advertisers to television, encouraged existing digitally mature brands to increase their spend. As a vertically integrated producer broadcaster and streamer, we are able to provide innovative ways for brands to advertise on television, such as through advertiser‑funded content, brand partnerships, product 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 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. S T R A T E G I C R E P O R T O U R S T R A T E G Y Our More Than TV strategy Our purpose We entertain and connect with millions of people globally, reflecting and shaping culture with brilliant content and creativity. Our 2026 vision A leader in UK streaming and an expanding global force in content. 2026 STUDIOS GOAL Grow revenues on average by at least 5% per annum, which is ahead of the market Expand Studios Further expanding by genre, geography and customers and growing faster than market Double scripted hours* Double our business with streamers* Expand global formats Supercharge Streaming Driving digital viewing and revenue through ITVX and Planet V, ITV’s leading addressable advertising platform Vertically Integrated Producer Broadcaster and Streamer Double monthly active users* Double streaming viewing* Double UK subscriptions* 2026 M&E GOAL More than double digital revenue to at least £750m across M&E * Double from full year 2021 See KPIs from page 24 Optimise Broadcast Digitally transforming as we continue to attract commercial broadcast audiences of unparalleled scale Maintain a share of at least 80% of the top 1,000 commercial television programmes Maintain share of commercial viewing  Scale linear addressable advertising 20 ITV plc Annual Report and Accounts 2022 Our purpose is to entertain and connect with millions of people globally, reflecting and shaping culture with brilliant content and creativity. This is aligned to our 2026 strategic vision, to be a leader in UK streaming and an expanding global force in content. It is becoming increasingly clear 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 strategy. See Social Purpose from page 44. Our initiatives to drive growth and future value are clear. Delivering on our strategy will be achieved by focusing on three core priorities: Expand Studios globally Supercharge Streaming Optimise Broadcast These priorities are not independent. They work together – reinforcing each other, creating synergies and delivering value. Our vertically integrated producer broadcaster and streamer model provides us with a real competitive advantage. How we will deliver our strategy The key to successfully delivering this strategy is by digitally transforming across everything we do. We will have a laser focus on viewers and every decision will combine our unique creativity with data‑driven insight. In addition, we will continue to: • Strengthen both our creative and commercial teams, ensuring we have the right skill set and culture to deliver our strategic vision, particularly in respect of our technology and data functions • Ensure we own and manage our rights efficiently and effectively. Maximise the value of these rights across our Studios, 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 S T R A T E G I C R E P O R T O U R S T R A T E G Y Core priorities ITV STUDIOS Media & 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 global TV and streaming content production, growing our revenues faster than the market. We will continue to diversify ITV Studios by genre, geography and customer to take advantage of the strong growth in demand for content globally, particularly from streaming platforms. Our key priorities are: • Growing our international scripted business by continuing to invest in creative development • Growing our global formats business by maximising the value of our key formats and developing new hit formats that travel internationally • Further diversifying our customer base by serving fast‑growing streaming platforms (both global and local) • Attracting and retaining leading talent, and nurturing the right creative and commercial environment for our talent to flourish • Continuing to collaborate across our • network of over 60 production labels to benefit from ITV’s scale and diversity Increasing the use of technology and innovation in production to drive efficiencies We also continue to consider selective value‑creating acquisitions and talent deals in both scripted and unscripted to secure the best creative talent and IP. We are supercharging streaming with the launch of ITVX, our free ad‑funded streaming service. ITVX leverages our investments to date in ITV Hub, BritBox UK, Planet V and data to drive digital viewing and revenue growth with a material increase in content spend. It significantly strengthens our offering to viewers – creating a destination for viewers rather than a catch‑up service. For advertisers it delivers valuable addressable audiences at scale and our established data and analytics capabilities will drive higher‑value, data‑driven pricing models. ITVX also has an integrated premium subscription tier, providing greater flexibility to both our viewers and streaming business model. While streaming viewing continues to grow significantly, linear broadcast remains very important to both our viewers and advertisers. Our priorities for Broadcast are to: • Maintain our USP of delivering live mass audiences on our linear channels as we invest in our broad schedule, in particular sport, drama and big entertainment shows. These audiences are highly valuable and highly demanded by advertisers as they build their own brands and ITV remains the first destination for advertisers to obtain these audiences at scale • Focus on scaling our linear addressable advertising capabilities, building on our investment in Planet V and our data, analytics and digital capabilities • Continue to build more strategic and creative partnerships with our advertisers • Continue to digitally transform ITV, the UK’s biggest TV advertising platform We have a data‑driven viewing model with one content budget across all our platforms and channels, which will enable flexibility to optimise viewing and revenue. BritBox INTERNATIONAL In addition to our subscription streaming services in the UK, we are continuing to roll‑out BritBox International, which is seeing strong growth in its subscriber base across territories. The service is currently available in eight countries and has 3.0 million subscribers (31 December 2021: 2.4 million subscribers). We will continue to explore opportunities to 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 S T R A T E G I C R E P O R T O U R B U S I N E S S M O D E L Our Business Model Our vision for 2026 is to be a leader in UK streaming and an expanding global force in content. This is aligned with our purpose of entertaining and connecting with millions of people 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, and optimise our broadcast business. We are confident that our vision and strategy is the right long‑term plan for ITV in a dynamic market environment. We are well positioned to successfully execute our More Than TV strategy which will further strengthen and diversify ITV, creating a more valuable digital media and entertainment business and deliver sustainable and growing returns to shareholders. 1. Our vision Our vision for 2026 is to be a leader in UK streaming and an expanding global force in content. Using our strategic assets... 2. Our strategic assets Creating and owning the rights to quality content and intellectual property Our strong, trusted brand, products and culture >6,000 talented commercial and creative colleagues One of the largest first party datasets in UK and second largest programmatic advertising platform in UK 10.5m We have 10.5 million monthly active users (MAUs) across all our platforms 93% In 2022, 93% of the top 1,000 programmes on commercial broadcast TV were on ITV 83% TV reaches 83% of the UK population (with a TV set) every week >£1.2bn We invested over £1.2 billion in content across our channels and platforms in 2022 which will increase to around £1.3 billion in 2023 >60 ITV Studios has built significant scale and diversification globally with over 60 labels across 13 countries 90,000+ active hours of content in the Global Distribution catalogue ...and our competitive advantages... 3. Competitive advantages World‑class content At the core of ITV is our focus on creativity and content, whether creating and selling our unique content around the world or investing in third‑party content to distribute across multiple platforms in the UK. Internationally, we have built production and distribution scale in key global creative markets through organic growth, selective acquisitions and talent deals. We are one of the biggest independent producers in the world, the largest commercial producer in the UK and one of the largest format distributors worldwide. Global formats and distribution ITV has built relationships and a broad customer base globally with major networks, streamers and local broadcasters, to whom we sell our world‑class content. Intellectual property ITV has developed, acquired and owns the rights to a diverse portfolio of shows, particularly drama and entertainment, that are hugely popular. Ownership of this intellectual property allows us to maximise monetisation opportunities, both through programme and format sales internationally, and more broadly through consumer products and interactive experiences to deepen engagement with our IP. Delivering unrivalled commercial audiences and addressable audiences at scale As a result of the scale and reach of our channels and the significant investment we make in quality content across our channels and platforms, we deliver mass simultaneous audiences on our broadcast channels and targeted addressable audiences at scale on ITVX, both in a brand‑safe and measured environment. Our digital advertising is sold through Planet V our programmatic video advertising platform, which is the second largest in the UK after Google. Our IP, insight and data on viewer and advertiser behaviour also helps us build deeper, more strategic and creative partnerships with advertisers and agencies. Vertically integrated producer broadcaster and streamer Our vertically integrated model creates many competitive advantages. It provides ITV Studios with a bedrock of core commissions and a formidable promotional engine for its content; enables cross‑promotion and monetisation of ITV Studios content across our business; secures access to great content for ITV’s channels and streaming platforms; and helps us to attract and retain the best creative talent in the industry. 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  ...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 We produce original content commissions for broadcasters and streamers (in the UK and internationally) from our production bases in the UK, the US, the Netherlands, Germany, France, Italy, Australia, Spain, Israel and the Nordics. We have a diversified customer base, selling to free‑to‑air broadcaster, pay TV operators and global streamers. Distribution We own the rights to a significant catalogue of programmes and formats that we sell and license to broadcasters and streamers internationally. The strong global demand for content provides a significant opportunity for us. Advertising Our family of channels and ITVX (and previously ITV Hub) drive significant advertising revenues from the ability to deliver mass audiences and more targeted demographics on broadcast television and addressable advertising at scale. This funds our investment in the content budget. Commercial partnerships We work with advertisers and advertising agencies to provide unique and innovative commercial and creative partnerships and sponsorship opportunities that extend beyond pure spot advertising. Pay We earn pay revenue from platforms in the UK by licensing our HD channels and from our online streaming services. Subscription and other consumer revenues In the UK, we generate subscription revenue through ITVX Premium (previously ITV Hub+) and BritBox UK which is also now part of ITVX Premium. Internationally, we deliver subscription revenue through our joint venture with the BBC, BritBox International, which is in the US, Canada, Australia, South Africa and the Nordics. We also monetise our consumer interactions through competitions, live events and merchandising. S T R A T E G I C R E P O R T O U R B U S I N E S S M O D E L ...supported by... 5. Our risk management framework ITV operates in an increasingly complex business environment and there are risks to the delivery of our strategic goals and the sustainability of our business model. Our risk management framework provides the business with the tools to identify, assess, manage and continually review our risks, and regular reporting provides the Board with the required insight to monitor our most critical Group‑level risks. This also allows management and the Board to adapt the strategy to ensure that we are striking the right balance between risk‑taking and risk‑mitigation and that any underlying risks in the strategy are being appropriately managed, therefore enabling the successful delivery of the strategy. We have identified the principal risks through our risk management framework and we have considered them as part of our viability assessment. ...to create value for... 6. Our key stakeholders Advertisers Through delivering unique scale and breadth of demographics, targeted advertising opportunities at scale and innovative and creative ways of engaging with consumers around quality programme brands. Customers Through our streaming business and competitions, we drive engagement and interaction with our much loved brands. Audiences Through a varied, high‑quality content offering, which they can watch and engage with on a variety of platforms and channels in a trusted, brand safe environment. Citizens With our creativity and scale, ITV can powerfully help shape culture for good. Our offering of free and universally available high quality and  trusted news services, helps to inform UK citizens and underpin democratic debate. Suppliers Through working closely with our suppliers to foster good working relationships and ensure they understand and comply with our Supplier Code of Conduct. Shareholders and debt investors Through a track record of creating shareholder value and delivering shareholder returns and through a track record of delivering strong profit to cash conversion. Broadcasters and streamers Through delivering quality programming that they can then monetise through their own business models. Our colleagues, programme participants and everyone we work with Through protecting, investing in and developing our talent and creating a culture that nurtures them to be productive, commercial and creative. People, and their physical and mental health and safety, are our priority at ITV. Legislators and regulators ITV takes its responsibilities and obligations as a public service broadcaster (PSB) seriously. ITV plc Annual Report and Accounts 2022 23 S T R A T E G I C R E P O R T K E Y P E R F O R M A N C E I I N D C A T O R S ( K P I S ) Key Performance Indicators (KPIs) We define our KPIs to align our performance and accountability to our strategic priorities. In 2021, we set out our new KPIs and ambition for 2026 for Studios and M&E, which we continue to report against. Of the KPIs outlined in this section, the following will be reported on a quarterly basis: ITV Studios total revenue growth, total digital revenue, total streaming hours, share of commercial viewing and share of top 1,000 commercial broadcast TV programmes. All other KPIs outlined in this section will be reported on a six‑month basis. ITV GROUP Adjusted EPS1 Cost savings Profit to cash conversion1 Definition Cost savings are permanent savings to the business. Managing our cost base and mitigating the impact of inflation is key as we aim to run our business as efficiently as possible and fund investments in line with our strategic priorities. Performance We delivered £23 million of permanent cost savings in 2022, which is ahead of the £17 million target. Since 2018, we have delivered a cumulative £106 million of cost savings. We will deliver an additional £50 million of cost savings by 2026. In total, we will deliver over £150 million of cost savings between 2018 and 2026. Definition Adjusted EPS represents the adjusted profit for the year attributable to each equity share. Adjusted profit is defined as profit for the year attributable to equity shareholders after adding back exceptional items. Further adjustments include amortisation and impairment of assets acquired through business combinations, net financing costs and the tax effects relating to these items. It reflects the business performance of the Group in a consistent manner and in line with how the business is managed and measured on a day‑to‑day basis. Performance Adjusted EPS decreased by 14% from 15.3p to 13.2p. Continued strong growth in ITV Studios adjusted EBITA up 22%, was offset by a decline in total advertising revenues (TAR) down 1%, ITVX investment and declining SDN and interactive revenues, down 21% and 17% respectively. Definition This is our measure of our effectiveness at working capital management. It is calculated as our adjusted cash flow as a proportion of adjusted EBITA1. Adjusted cash flow1, which reflects the cash generation of our underlying business, is calculated on our statutory cash generated from operations and adjusted for exceptional items, net of capex on property, plant and equipment and intangible assets, and including the cash impact of high‑end production tax credits. Performance Profit to cash conversion was 75% in the year. While we continue to manage our working capital tightly, profit to cash conversion was lower in 2022. This is as a result of our growing Studios business and the timing of deliveries. In addition, it reflects the increased commissions for ITVX where we have taken delivery of programmes but not yet made them available on the platform. This was partly offset by our strong TAR revenues in 2022 and tight working capital management. 2022 13.2p ‑14% on 2021 2022 £106m cumulative savings since 2018 2022 75% 2026 Target Deliver over £150 million of cumulative savings between 2018 and 2026 2026 Target Maintain at around 85% 2019 2020 2021 2022 13.9 10.9 15.3 13.2 2019 2020 2021 2022 87 80 75 138 24 ITV plc Annual Report and Accounts 2022 1. A full reconciliation between our adjusted and statutory results is provided in the APMs section S T R A T E G I C R E P O R T K E Y P E R F O R M A N C E I I N D C A T O R S ( K P I S ) Number of formats sold in three or more countries Definition The Studios business is focused on maximising unscripted value by both protecting and expanding existing formats and creating new formats that travel internationally. A good measure of international success is when a format is commissioned in three or more countries in the year. Spin‑offs such as Beat the Chasers are considered distinct to the original format (i.e. The Chase) for the purpose of this indicator. Performance The number of formats sold in three or more countries increased to 19 formats. Recent formats that have sold in three or more countries include My Mom, Your Dad; Make Love Fake Love; and Game of Chefs. Expand UK AND GLOBAL PRODUCTION ITV Studios total revenue growth2 ITV Studios adjusted EBITA margin %2 Total high‑end scripted hours Definition ITV Studios total revenue measures the scale and success of our global studios business. It includes revenues from programmes sold to M&E, which as a vertically integrated producer broadcaster and streamer, is an important part of our business. Performance ITV Studios total revenue grew 19% to £2,096 million. Total organic revenue at constant currency (which excludes acquisitions and assumes exchange rates remain consistent with 2021) was up 14%. There was a £56 million favourable currency impact in the year. Definition This is the key profitability measure used across the ITV Studios business. The profile of adjusted EBITA margin differs for production and distribution activities, and further varies with each production due to genre, customer type and maturity. Adjusted earnings before interest, tax and amortisation (EBITA) is calculated by adding back exceptional items and including high‑end production tax credits2. It reflects the underlying performance of the business and provides a more meaningful comparison of how the business is managed and measured on a day‑to‑day basis. The margin is calculated based on ITV Studios total revenue. Performance ITV Studios adjusted EBITA margin was 12.4% (2021: 12.1%). Margins continue to be impacted by incremental costs associated with health and safety protocols, as well as inflationary pressures facing the production industry; these have been partly offset by mitigation measures. Definition Total high‑end scripted hours is an important measure of the success of our strategy to grow our global scripted business. High‑end scripted hours include new commissions or returning franchises that have a higher cost per hour than continuing drama. High‑end scripted drama is important as it is one of the fastest growing segments of the content market. These dramas are sold to global streamers, pay platforms or free‑to‑air broadcasters, where they are expected to perform well with viewers in their domestic market, as well as having international distribution appeal. Performance The number of high‑end scripted hours produced by ITV Studios increased by 58% to 276 hours driven by titles such as The Outlaws and Maternal in the UK, and internationally, titles such as Baby Fever from Apple Tree Productions and Petra from Cattleya. 2022 2022 £2,096m +19% on 2021 12.4% +0.3% points on 2021 2026 Target Grow on average at least 5% per annum 2026 Target Return to 13% to 15% range from 2023 onwards 2022 276hrs +58% on 2021 2026 Target Grow to 400 hours 2022 19 formats +4 formats on 2021 2026 Target Grow to 20 formats 2019 2020 2021 2022 1,375 1,830 1,760 2,096 2019 2020 2021 2022 15 2019 223 11 2020 112 12 12.4 2021 2022 175 276 2019 2020 2021 2022 14 14 15 19 2. A full reconciliation between our adjusted and statutory results is provided in the APMs section ITV plc Annual Report and Accounts 2022 25 S T R A T E G I C R E P O R T K E Y P E R F O R M A N C E I I N D C A T O R S ( K P I S ) C O N T I N U E D Expand UK AND GLOBAL PRODUCTION % of ITV Studios total revenue from streaming platforms Definition In the medium‑term, the key driver of growth across the overall content market is expected to be significant investment by streamers. The percentage of ITV Studios total revenue from streaming platforms is an important measure to demonstrate the extent to which the business is taking advantage of this growth globally and further diversifying its customer base. See earlier KPIs for definition of ITV Studios total revenue. Performance The percentage of ITV Studios total revenue from streaming platforms grew to 22%. Notable deliveries on streaming platforms in 2022 include: The Reluctant Traveller and Physical for AppleTV+; Snowpiercer and Baby Fever for Netflix; Love Island USA for Peacock; Cosmic Love France for Amazon Prime; and A Spy Among Friends and Loaded in Paradise for ITVX. M&E SUPERCHARGE STREAMING AND OPTIMISE BROADCAST BritBox INTERNATIONAL Total digital revenue UK subscribers Total streaming hours Monthly active users Share of top 1,000 Share of commercial Total subscribers Definition Total digital revenue is an important measure of the acceleration of our digital strategy as we supercharge streaming. It includes digital advertising revenue and subscription revenue (excluding BritBox International subscription revenue) as well as linear addressable revenue, digital sponsorship and partnership revenue, ITV Win and any other revenues from digital business ventures. Performance Total digital revenue grew 18% to £411 million. The growth was largely driven by digital advertising revenue, which grew 17%, and the year‑on‑year growth in subscription revenues from ITV Hub+, BritBox UK and ITVX Premium, up 29%. Definition UK subscribers captures total UK subscriptions (including free trials). Prior to the launch of ITVX, this included ITV Hub+ and BritBox UK subscriptions. From December 2022 onwards, this measure includes subscriptions to ITVX’s ad‑free premium tier as well as standalone BritBox UK subscriptions. It is an important measure of how successfully we provide a clear, compelling and differentiated subscription offering. Performance Total UK subscribers as at 31 December 2022, increased 17% year‑on‑year. Growth came from both the ITVX platform (which replaced ITV Hub+ in Q4 2022) and BritBox UK subscribers. Definition Driving digital viewing by attracting new viewers and enticing all our viewers to watch more ITV content is key to our strategy. Total streaming hours measures the total number of hours that viewers spent watching ITV across all streaming platforms. This figure includes both ad‑funded and subscription streaming. Performance Total streaming hours increased 9% to 1,139 million hours. This growth was driven by our strong content offering, such as Love Island, I’m A Celebrity…Get Me Out Of Here!, and the FIFA World Cup. Monetisable streaming hours were up 18% year‑on‑year. In 2022, we took the strategic decision to reduce the availability of pre‑transmission drama drops and boxsets outside of ITV’s own streaming services, such as on Sky and Virgin, where we cannot serve and monetise dynamic advertising. This decision does not reduce existing revenues. Over time, we anticipate that we will see this viewing move to ITVX and be more effectively monetised. The transitional impact of this decision drives the difference between total streaming hours and monetisable streaming hours. (MAU) commercial broadcast viewing TV programmes Definition Definition Definition Definition Monthly active users captures the Continuing to deliver significant Maintaining and growing our The number of BritBox average number of registered audience scale is important to strong competitive position in the International subscribers users throughout the year who M&E’s overall success as ITV has free‑to‑air market is vital for the captures total global accessed our owned and operated a unique selling proposition being M&E business to maximise its subscriptions (excluding UK, on demand platforms each month. one of the only places to reach advertising revenues. ITV Family including free trials). It is an It is an important measure because mass simultaneous commercial share of commercial viewing is the important measure of the scale advertisers want to reach as many audiences. This KPI measures measure of this. ITV Family share and reach of our international different people as possible. ITV’s proportion of the top 1,000 of commercial viewing is the total subscription offering. BritBox commercial broadcast TV viewing of audiences over the year International is a joint venture programmes, as measured by achieved by ITV’s family of between BBC Studios and ITV. BARB based on viewing figures. channels as a proportion of all This includes TV viewing from commercial broadcast TV viewing transmission and seven days in the UK. Performance Monthly active users grew 6%* to 10.5 million. The return of popular entertainment shows such as Love Island, I’m A Celebrity…Get Me Out Of Here! and the FIFA World Cup tournament brought record‑breaking viewers to our digital platforms. These live events, alongside a range of genres, attracted a greater post‑transmission on catch up, as well as six weeks prior to the transmission window. It excludes programmes with a duration of

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