Good morning, everyone. Welcome to ITV's 2024 interim results. I'm here with Chris Kennedy, our CFO and COO, who you all know. I will hand over to Chris shortly to walk you through our financial and operational performance. But first, let me start with a very quick overview. We have had a really good start to 2024, delivering a strong financial, operational, and creative performance. We've achieved a 40% increase in group adjusted EBITDA, and we continue to make significant strategic progress across ITV as we execute our strategy. ITV Studios has performed well against the expected backdrop of deferments due to the strikes and slower FTA commissions, as we've previously guided. Despite this, ITV Studios is forecast to deliver record profits over the full year.
Now, as you all know, we've talked about this before, 2023 was the year of peak net investment in ITVX, and the results of that are clear, with strong growth both in digital revenues and also in viewing in the half. We've made really strong progress in improving efficiency and simplifying our ways of working right across the company. We're on course to deliver the GBP 40 million of cost savings in 2024 that we recently guided. Now, if you put that all together, we are really confident of growing profits from here on in and are on track to deliver our 2026 KPI targets. I would like to thank everyone at ITV who has contributed to both our performance this year and for all the progress that we have made over the last few years.
It's been a really tough year for people within ITV, with the impact and uncertainty of our restructuring and efficiency program, and I would like to now thank them all for their professionalism and their commitment. This slide that I've just put up demonstrates the group's financial performance, where you see that total external revenue was down just 2%, with ITV Studios affected, as I said, by the short-term factors we've already mentioned. M&E revenues were up strongly, driven by 12% growth in digital revenues and better than expected linear performance. The significant growth in group-adjusted EBITDA was driven by the operational gearing of M&E, a higher margin in ITV Studios, helped by higher margin catalog sales, and of course, the delivered cost savings. In line with our dividend policy, the board has declared an interim dividend of 1.7p.
This table of our KPIs shows the excellent progress we have made to date, which puts us either on track or ahead of our 2026 targets. I did just want to say a few words on subscribers, where the performance is as we expected. We've always described ITVX since its launch as an ad-funded proposition, with subscribers bringing in a relatively small but welcome amount of additional profit and revenue. As we look ahead to delivering at least GBP 750 million of digital revenue by 2026, it is clear that the best returns will come from prioritizing our focus on investment on the ad-funded model, rather than chasing a subscriber target, which would result in a weaker ROI. Now, I'm gonna just hand over to Chris to talk you through the results in more detail.
Thanks, Carolyn. Good morning, everyone. I'll start with the performance of Studios. Studios profit increased year- on- year, despite the expected decline in revenue. Significantly higher catalog sales partly offset the lower production revenues as broadcasters and streamers managed their program budgets. The higher mix of these higher margin catalog sales, combined with cost savings, resulted in an increase in profits. UK revenues were down against a tough comp. There were a number of high-value deliveries to streamers in 2023, and revenues have also been impacted by fewer ITVX premieres and the absence in 2024 of The Voice Kids and I'm a Celebrity... Get Me Out of Here! South Africa.
U.S. revenues reflect, as expected, the impact of the 2023 writers and actors strike, and this was compounded by the phasing of large scripted deliveries to the streamers in H1 of last year, such as Physical for Apple TV. Unscripted deliveries in this year, such as Love Island Games for Peacock, offset some of this decline. International revenues were also down due to lower demand from free-to-air broadcasters in Europe, who've been holding back spending until there's more certainty in the ad market. We're now starting to have more positive conversations. Global partnership revenues were up 9%, with strong growth in catalog sales, leveraging the breadth and depth of our extensive high-quality catalog of over 90,000 hours, as customers turn to acquired content to compensate for lower commissioning. Studios Adjusted EBITDA grew 5% with a margin of 15.7%.
This reflects the revenue mix, along with GBP 9 million of cost savings delivered in the period. As I explained at the full year, Studios' EBITDA increasingly benefits from the legislative change in UK production tax credits. GBP 3 million of the EBITDA improvement in the first half is as a result of the change. The effect is to increase our EBITDA, adjusted EBITDA, adjusted EBITDA margin, profit before tax and tax expenses, but it leaves our profit after tax unchanged. Over the full year, we expect the benefit from this change to be around GBP 10 million, which is likely to increase in 2025, as the current year includes a mix of the old and the new regimes. Looking to the full year, even before accounting for the change in UK production tax credits, ITV Studios is expected to deliver record profits.
Full year margin will be lower than H1, reflecting the relatively lower mix of catalog sales in the second half, but will be within our 13%-15% guidance range. Previous guidance was for broadly flat full year revenues as a result of the U.S. actors and writers strikes, and a more challenging free to air market. We now expect revenues to be down low single digits, but our full year profit expectations remain unchanged. This is due to a small number of key productions being contracted as executive productions rather than co-productions. This has no in-year profit effect, but it does mean we recognize less in in-year revenues. Deliveries will be weighted to Q4, with Q3 revenue expected to be down a similar percentage to H1. On to M&E. Total revenue increased by 7%, with total advertising revenue increasing by 10% ahead of expectations.
We saw strong viewing across our broadcast channels and ITVX, with a very successful Euros, a year-on-year increase in viewing of Love Island, and a continuing strong drama performance. Digital advertising revenue was up 17%, with all ITVX viewing metrics remaining strong. Of course, this performance benefits from the Euros, but underlying performance is also strong. The ad market is firm, and our investment in Planet V and ITVX is continuing to drive high double-digit growth in digital advertising revenue. Overall, digital revenues were up 12% to GBP 244 million, and we're on track to deliver at least GBP 750 million of annual digital revenues by 2026. Non-advertising revenues were down, as expected, and this revenue performance has resulted in a 230% increase in adjusted EBITDA, demonstrating the high operational gearing of M&E as we maintain cost discipline.
Content costs have increased only marginally, despite the bulk of the cost of the Euros falling in the first half, and infrastructure and overhead costs have actually declined as inflation was more than offset by GBP 14 million of cost savings. On the other hand, variable costs were up 15% due to our planned increase in marketing to drive viewing and revenue. Looking forward, we expect Q3 total ad revenue to be broadly flat, and as a reminder, Q3 2023 included the Rugby World Cup, and whilst Q3 2024 includes a few Euros matches, the overall benefit of the Rugby World Cup was higher. Moving on to the balance sheet and cash flow. Cash conversion was 73% on a rolling 12-month basis, reflecting a significant increase in working capital in H1, with higher levels of production activity in the U.S. following the end of the strikes.
Our net debt at the end of the period was GBP 515 million, and this includes the proceeds of the disposal of BritBox International, which are being used to fund the share buyback. If you exclude the net proceeds designated for the buyback, net debt is GBP 697 million. We continue to maintain a robust balance sheet with a net debt to Adjusted EBITDA of 0.9 times. In order to reprofile and extend the maturity of our debt, we've issued a EUR 500 million Euro bond with a maturity in June 2032 on attractive terms. The proceeds of the bond issue were used to repay a GBP 230 million pounds term loan and to retire EUR 240 million of the EUR 600 million Euro bond due in 2026.
In addition, we have GBP 900 million of undrawn committed facilities, GBP 300 million of which matures in June 2026. We'll complete an extension of the maturity of this facility before the end of this financial year. Our accounting surplus on the pension scheme is GBP 225 million, and having recently concluded the latest triennial valuation, we expect no further pension contributions while the scheme is in surplus, except a minimal payment relating to a legacy asset-backed scheme. This removes a significant historic drag on free cash flow. Finally, we've agreed non-binding heads of terms to resolve a very long-running historical pensions dispute. Should the dispute be resolved in line with the agreement, we would make a one-off cash payment of around GBP 25 million into the ITV pension scheme in 2025. You'll be familiar with our capital allocation framework, which remains unchanged.
In line with our policy, the board has proposed an interim dividend of 1.7p, and remains committed to paying a full year dividend of 5p per share. The share buyback, which was announced at full year results, is progressing well. As of 30th of June, we have bought back GBP 53 million of stock. I'm really pleased with the progress we've made on our cost saving programs. In the first half, they delivered GBP 23 million, and they're well on track to deliver GBP 40 million of incremental in-year savings in 2024 as previously guided. At the same time, we now expect the one-off cost this year of delivering those savings to be around GBP 30 million, which is GBP 20 million lower than our previous guidance. And finally, here is a reminder of our planning assumptions.
The only changes relate to tax, where we expect a slightly higher adjusted effective tax rate at around 26% versus our previous guidance of 25%, both this year and over the medium term. Exceptional items, which are now expected to be around GBP 65 million, down from GBP 90 million, mainly due to lower restructuring costs. This increases free cash flow this year by around GBP 25 million. Now, back to Carolyn.
... Thanks, Chris. As you know, our strategic vision is to be a leader in UK ad-funded streaming and an expanding global force in content. Our strategy has three key pillars: expand studios, supercharge streaming, and optimize broadcast. As you can see on this slide, each has a purposeful objective, which gives our teams a clear focus and against which they are consistently delivering. This is supported by being a vertically integrated producer, broadcaster, and streamer, which benefits both businesses. For studios, it provides a base of core commissions, a platform to make content famous, and critically, it really does help attract and retain talent, which is so key to our business and to any creative business. For M&E, it gives access to world-class content for ITV's channels and ITVX, and facilitates deeper and more creative and productive partnerships with advertisers.
So let's turn to our first strategic pillar, expand studios. The global content market is large, it remains attractive, it's got hundreds and hundreds of platforms and broadcasters. They all need a range of quality content to succeed. So we anticipate growth in all of the key segments in which we operate, including premium scripted content, unscripted formats, and catalog sales, due to the continued strong demand from streamers in these areas, and we expect to continue to outperform the market. We do have a strong track record, as you know, and as you can see on this slide, over the last 6 years, in each of these segments, we've grown significantly faster than the market. The titles which sit within these categories demonstrate the creative and commercial strength of ITV's labels. Fool Me Once was one of Netflix's top 10 most-watched English language programs.
This was produced by Quay Street, one of our recent talent deals. Squid Game: The Challenge, which everyone has heard about, also for Netflix, was one of their most-watched unscripted, original productions. Now, we know British dramas sell extremely well around the world, and of course, a great example of this is Endeavour, which ran for nine series, and we sell that to 195 countries. Our catalog library has over 90,000 hours, and the revenue stream from these library sales has grown over the last year as budgets have tightened, especially with the FTAs. For broadcasters and platforms, it's a lower-cost method of filling a schedule or strengthening and extending their range of content, and it is a really high-margin opportunity for us. The global scale and diversity of content and customer base puts ITV Studios in a strong position to continue to take market share.
We continuously manage our portfolio of labels, as you know, to attract and retain talent, and we've just acquired 51% of scripted production business, Hartswood, makers of Sherlock, and most recently on ITV, Douglas Is Cancelled. We've also sold our investment in Blumhouse Television in the U.S. for $60 million. Slide 19 here shows our exciting creative pipeline across scripted and unscripted, and for a broad range of customers. The fantastic shows we've delivered for the streamers have solidified our relationships with them, and it's built a strong track record, as I said. We now have development deals in place with each of them. Now on to the second pillar of our strategy, Supercharged Streaming, where our aim is to drive digital viewing through ITVX and digital revenue through Planet V. You've seen we've had a great first half for ITVX.
We continue to build an engaged and sustainable audience. Our key viewing metrics here show strong growth, with streaming hours up 15% and monthly active users up 17%. What is impressive about these numbers is that both of these are compared to ITVX's really strong launch last year, where we had significant investment for quite a period of time. We are now the number one commercial broadcaster video on-demand platform, and we are attracting harder to reach audiences which drive reach, which is so important for advertisers. Streaming hours among 25-54s was up 29%, and for men was up 37%. This point about engagement is a really important one. Our audiences are more engaged, watching for longer, with streaming hours per viewer up 5%.
We've seen a positive impact from our recs engine, our recommendation engine, which we launched at the end of last year. 30% of users are going on to watch additional content recommended to them on the platform, and that is in line with expectations, and it does indicate a successful implementation of that. So we can see also the power of our dramas to retain audiences. 93% of those who watched Mr Bates vs The Post Office on ITVX went on to watch other programs. That's an amazing stat. Our approach to having one content budget across linear and ITVX has, as you can see, proved to be really effective, enabling us to have a flexible windowing strategy to drive the most value out of our disciplined content investment.
The team are leveraging our increasing data and analytics capability to continue to drive that reach and the inventory on ITVX by further enhancing our product, our content, distribution, marketing, and monetization, and of course, we continue to test and learn. For example, improving the discoverability of ITVX. One method we are using is creating additional links on homepages that bring users directly to ITVX from the main screens of their devices, which is already proving successful in driving MAUs.... We've also increased our marketing investment, developing a more responsive approach, putting more weight behind our biggest trending shows, which has worked well, increasing our spontaneous consideration. In addition, we've launched recently, something called ITV Insiders, which is a strategy bringing together over 100 of the most talented social media content creators that gives them unique access to ITV, to its brand, its talent, to its content.
That drives engagement because it puts our programs at the heart of millions of social conversations. It's only just launched. It's already established itself as a really effective marketing channel to increase males and streaming hours. Now, turning to Planet V, ITV's leading addressable advertising platform, and the second largest programmatic video advertising platform in the U.K. after Google. Thank you to those who have already watched our recent commercial webinar. If you haven't, I really urge you to do so because it demonstrates how Planet V has been critical to the success of ITVX. The link at the bottom of this slide here will just take you there, and it, it doesn't take very long. The platform has over 2,000 users in the U.K. who have access to data from over 40 million ITVX registered users.
We augment this with third-party data at sources, which we've talked about to you before, Tesco dunnhumby, Boots Advantage Card, that creates over 20,000 targeted options, which delivers precise one-to-one communication. Because we wholly own Planet V, we keep 100% of the revenue. A few stats again, to illustrate its impact. From 2021 to 2023, we've grown our digital advertising revenues by over GBP 140 million, and in 2023, we also outperformed the digital display market. To date, over GBP 1 billion pound of revenues have been booked through Planet V. We offer increasingly sophisticated and valuable ad inventory, which advertisers are prepared to pay more for. Over the last two years, for instance, we've delivered double-digit growth in our CPMs.
And Planet V also allows ITV to compete for online video budgets, particularly platforms such as YouTube, and take share in this, what is obviously, a large and growing addressable advertising market. Now, to our third pillar, which is to optimize broadcast. ITV has the unique ability to deliver live mass simultaneous audiences, which are so valuable to advertisers through live sport, big entertainment shows, which are usually stripped, and popular dramas. The average live match audience across the 25 games of the Euros was 6.5 million, including the England semifinal, which peaked at over 20 million. Mr. Bates delivered a live audience of around 4 million an episode across the series. Love Island delivered a peak live audience of 2.2 million for the first episode, which was up year- on- year.
Another example is The 1% Club, which has grown its audience over the last three series and had a peak live audience of over 4 million. Now, many of these programs also deliver harder-to-reach target audiences at scale. For example, over 9 million of those who watched England's semifinal were men. So in total, ITV reaches on average 46 million people every single month, which demonstrates ITV's scale and market-leading position in the UK. What sets us apart from our competitors and ensures that ITV remains highly compelling in a competitive ad market is our unique combination of three powerful commercial propositions, all of which is in a brand-safe and trusted environment. Kathryn Swarbrick, General Manager and SVP for Adidas Northern Europe, has put it much better than I could ever put it.
With mass reach," she says, "the highest quality of content environments, ability to target via addressable VOD, and great creative sport, ITV has been, and is, a vital partner in our business achieving our goals." I think they'll be winning quite a lot of awards for their ad for the Euros. Demonstrating the effectiveness of that advertising and all advertising with ITV is also key to growing revenues. Over the last two years, we've built a range of measurement tools to measure the outcomes and effectiveness of working with ITV. I know this has been welcomed by the industry and by clients, and this is an important ongoing program. There is further detail on this in the commercial seminar. So in summary, we'd like to leave you with these six key messages.
We have transformed ITV over the last five years, and our strong performance demonstrates that we've adapted to the rapid changes within our industry. We have the technology, the data, and the capability across ITV to be nimble, and we will continue to adapt to inevitable further change. Our restructuring and efficiency program is well-organized and disciplined, gives us the confidence that we will deliver significant annual cost savings. Our creative output, both commissioned and ITV Studios, goes from strength to strength, and our windowing strategy has meant that we are really optimizing our content spend. ITV is in a solid position with a leading global studios business, a high-growth streaming service, and a cash-generative linear business. Finally, our balance sheet is strong, and going forward, we expect to grow profits and deliver healthy returns to shareholders. Thank you, and now we'd like to take your questions.
... We have our first question from Tom Singlehurst with Citi. Tom, your line is now open. Please go ahead.
Yeah, thank you very much. It's Tom here from Citi. Really appreciate it, you taking the question and the presentation. First question, ITVX performance obviously very strong across the board in the first half. I know in the past you've said that quarter by quarter, we shouldn't necessarily expect a sort of linear relationship between the viewing and advertising revenue. I suppose, though, the question I wanted to ask is whether the 2Q and 1H performance is specifically skewed by sports, and whether that is a bit more directly monetizable, and therefore, in the second half, if without any big events, should we expect to sort of drop off in ITVX viewing and ITVX monetization? So that's the first question. The second question was on ITV Studios. The point you made about catalog sales were very well made.
It's clearly useful for the margin, but I was just wondering whether the strong near-term growth there is a sign that broadcasters are becoming more cautious. Any insights on that would be useful. And then the final one, perhaps for Chris. I think you referenced the sale of a US studio for $60 million. Obviously, earlier in the year, we had the sale of BritBox, where the valuation also surprised. Can you just talk about the scale of sort of non-core investments and whether there's a systematic plan to monetize them? That'd be great. Thank you.
Great. Whole range of questions there, Tom. Good morning. I think just remember on sport, I'll bring Chris in here, obviously. But I think just remember on sport, we are absolutely committed to live sport, and we're in the enviable position, I think, as a commercial PSB, that we get listed events. And so, actually, on a fairly regular basis, we get sport, and we expect to get big audiences for those big national moments. But I think we also know that drama drives a lot of ITVX viewing, as does strict reality. And so you might get a spike for a game or two or three. The big games get the really big audiences.
The average games for the Euros got us about, you know, if you average it out over the 25 games that we broadcast, it was about 6.4 million per ep. And that compares really with a strong drama or a strong, like BGT or I'm a Celebrity, will all do higher than that. So I think it's kind of, you know, what I'm, what I'm saying is sport, live sport is extremely important. It does give us this massive spike. It brings us a lot of ad revenue, but from a viewing perspective, you know, it averages out to being the same really as, you know, a very strong drama or a very strong reality show.
But I think you're right, Tom, just in terms of don't get too fixated on the quarterly performance, just look at the trend. 'Cause certainly Q3, you know, you've got the Olympics, which will be delivering a lot of viewing for a competitor. So, we're really pleased with the performance of ITVX, and especially as Carolyn said, it's comparing to that launch period, where we had a really great slate of content going on it and a lot of marketing behind it.
And then on your ITV Studios question, I think the key thing here is that what catalog sales has done is kind of offset any of the cyclical ad revenue market issues that were across Europe for broadcasters. And so it's very high margin, as you know, and it's a great offset. And it shows, I think, how diversified we are within the studios group itself. So whether it's genre, by geography, customer, whether it's catalog versus scripted or unscripted, it's a very diversified group, and so it can take on things like this. And that's why I think the performance of Studios has been so strong, despite, you know, we're saying record profits for the year.
It is despite a kind of, you know, a more difficult backdrop than we've had before because of the strikes and the FTA slowdown of advertising revenue. I would say the indications forward-looking would be, having spoken to a few of the European broadcasters, it—they're definitely seeing improvement in their economies, and they are, you know, therefore, the ad markets are definitely improving in all, in the markets that I deal, or we deal with. And certainly if the U.K. is anything to go by, then, you know, the underlying ad market is very firm here at the moment, and—and it's up year-on-year. So despite, you know, if you took the Euros out of that, you know, the market was already up 3% on average, compared to last year.
I think, you know, it's, it's probably too early to say how FTAs are gonna respond to that in Europe, but I, but I think there's a, there's definitely a more positive picture on the ad market.
Then, Tom, the final question was around Blumhouse. There aren't. We don't have a big portfolio of non-core assets, and both BritBox and Blumhouse were really... We seized an opportunity to get a great price for the assets.
That's very clear. Thank you very much.
Pleasure.
Thank you very much. Our next question comes from Nizla Naizer with Deutsche Bank. Your line is now open. Please go ahead... Nizla , can we double check you're not on mute? We can't hear anything.
Oh, sorry. Could you hear me now?
Yeah.
Yeah.
Yes, we can.
Excellent. Sorry about that. I have a couple of questions from my end. Firstly, on the Q3 target outlook being flat, could you confirm again? Does that also include a negative impact of the Olympics being shown elsewhere? Or has that historically not had too much of an impact on your viewing trends, etc.? Some color on maybe the underlying drivers of that outlook would be great. Secondly, in the studios business, the change in the contract structure that you mentioned when it comes to production, what brought that on, and is that an advantage to sort of have these negotiations? Could you give us some color as to why you decided to go down that path? That would be great. Thank you.
Okay. So, just on the Olympics, obviously it's a big event, and it's on the BBC. So it will affect viewing, I think, at that period of time. August is usually a very quiet month for viewing because a lot of people go on holiday anyway. So, actually, August is a quiet month, generally. The Olympics will obviously boost BBC's viewing figures, but it's really interesting to me that a lot of advertisers do Olympics campaigns, so they're actually doing copy that is all about the Olympics. And so actually what we've seen is that we've had some quite high-profile Olympic campaigns that will be running on ITV, whether it's National Lottery, whether it's Aldi, whether it's NatWest, Toyota, P&G, British Gas. Discovery is actually doing quite a lot of advertising on ITV about the Olympics.
So we actually see possibly a benefit from advertising in on the Olympics, because obviously we're a commercial broadcaster. We take advertising, obviously, and the BBC don't. So it's definitely something to do with viewing, but not so much for revenue.
Yeah, and then on the studios contract structures, maybe just help if I give you the kind of layman's version of the different structures. So, full productions, which are most of our business, that's where we have the ultimate and complete responsibility for the financing, the producing, the delivery of the show, and that means we recognize all of the revenue. We often choose to share that risk with a co-producer, and that can either be a client or another studio, and in which case, we recognize, you know, the share of revenue that relates to how much risk we're taking. And then you've got the executive productions, where we're paid a fee by the client for the IP and the executive production.
There, we recognize only the fee, none of the production revenue. This is not new. The studios team do this every day, and they will make the right decision, the right commercial decision for ITV Studios in those negotiations. It just happens, in this case, that they've gone with an executive producer deal, which minimizes the risk.
I think the only reason it's come up at all, because we've been doing this for many, many years, so what Chris describes is just the way everybody works in the industry. Everyone has choices to how they produce, and we do it for multiple reasons. And as Chris says, Julian and the team will make a decision for the business, which is the best economic decision for the business. Doesn't affect profit, so it's an accounting thing. But I think it's come up this year because it's one big show that we're EP-ing. So it-- that's the only reason it's come up in a half, and in the, you know, it usually, you wouldn't, it wouldn't even be noticeable.
Very helpful. Thank you.
Okay.
Thank you very much. As a reminder, to ask a question, please press star followed by one on your telephone keypad now. When prepping to ask your question, please ensure your device is unmuted locally. If you change your mind, please press star followed by two. Our next question is from Ed Young with Morgan Stanley. Ed, your line is now open. Please go ahead.
Thank you. Good morning. I've got, two, please. First of all, you, you referenced, a better tone of conversation with some of the free-to-air players. I wonder if you could perhaps give a little bit more, color on that. Is that geographically broad-based, or are there particular pockets where that's, stronger? And then second of all, you, you mentioned that obviously we are now through the initial investment for ITVX, but you've also referenced there is further improvements coming in a whole range of areas, on the platform in H2. So I wonder if you could perhaps give a little bit more color in, in terms of what's, what's being driven through the, the, in, in H2 and what we can expect from that? Thanks.
Sure. I think really when I referenced that, it's, you know, broadcasters that are operating in France or, or Germany or Spain, actually. So that, that's where we would, you know, we've been chatting to them, more, you know, just generally. I think there's no question, if you look at just the numbers, that the ad market has improved right across Europe in every market. So, it's just getting a bit of color behind that, and that is, it is more positive, no question. On the-
Although that will take time to work through.
Yes, it will. There'll be a lag.
Yeah.
Yeah, definitely. There'll be a lag, because commissioning decisions and then actual commissions coming to screen, there's a time lag, so there will be a bit of a lag on that for sure.
And then just on ITVX improvements, I mean, what we, when we talked about the investment we were making...
... We talked about an incremental GBP 20 million in non-content and then GBP 160 million of content. You'll have seen from our guidance, actually, that, because of all the learnings we took from launch, we've been able to bring that content guidance down by GBP 75 million, and deliver the viewing audiences that we wanted. And then that step up in cost, we said, was a permanent step up, so we've really got GBP 20 million to continue to improve the functions and features of the platform. So that includes the recommendation engine, the distribution, the deep linking that Carolyn talked about in her presentation. So that budget is there to continually evolve the product, as well as obviously marketing, the investment in marketing, which is really helping to drive viewing.
Yeah.
Over time, the brand and the consideration will increase just because more people are going there. They realize the breadth of content. They realize that ITVX has got films on it, for instance, and the big depth of acquired content we've got now.
Thanks.
Thank you very much. Our next question is from Marianna Sixsmith with UBS. Marianne, your line is now open. Please go ahead.
Hi there. Thank you for the presentation. Just two questions from me. The first is on just subscriber numbers in H1. It looks as though they've fallen 36%, so I just wanted to ask kind of what the main drivers were behind the decline there. And then my second-
Sorry. I'm so sorry. I think the line... There's something wrong with the line. We neither of us heard the first question. Do you think you could just repeat that?
Yeah, of course. Let me go again. Hi there. Is this better? Can you hear me okay?
Mm-hmm.
Bit better.
Okay now?
Yeah.
Great. So my first question was just on the subscriber numbers in H1 falling 36%. So I just wanted to check what the drivers were behind the decline.
Mm-hmm.
And then the second question is just on some of the comments made on Planet V and off the back of the commercial webinar. I'm just wondering if we could get some more color on how you're setting the pricing kind of in relation to the expense of marketing. They are my two questions. Thank you.
Okay. On subs, we said at the last two, actually, in the last two announcements we've made or, you know, updates we've done to the market, that we were making the subscription offer a better user experience. So we were migrating all of BritBox subscribers to ITVX premium subscribers. That was quite a migration, and we expected there to be some fall off on subscriber numbers. That's one of the drivers. The other one is that we have taken BritBox off Amazon, and that, again, that was deliberate, 'cause the BritBox brand is within the ITVX premium brand and could be quite confusing to consumers to see it only on one platform. That is also another driver. But I think the most important thing strategically is that we have focused all our money and all our effort into ad-funded ITVX.
So everything that we've done in terms of a content partnership or acquisitions or how we do it, has all been about ad-funded. And the reason for that is because we know we will get much better return from that than we would be chasing a subscriber target, which is kind of meaningless, because you'd be acquiring subscribers. So you'd be doing deals just for the subscriber target, where we won't be getting a very good return, in fact, if any at all. So we've focused on that. And remember, our most important target, really, in the digital, you know, when we're looking at revenue other than, you know, all the linear metrics, is digital revenue of GBP 750 million by 2026.
That's what we are aiming for, and we know that the way to do that in a most responsible and disciplined way is by really focusing on ad-funded streaming.
And I think, Marianne, the final thing I'd add is that you asked, you know, the 36% fall. All of that is down to the cleaning up of the viewer offer that Carolyn talked about, so it's a one-off reset. Actually, churn on premium is really low.
Really low.
'Cause we now really, really understand the data on ITVX, and we've got loads of it a year on, a year and a bit on. And so what we do is we upsell to only the people that are not very valuable because they're so light in terms of coming into ITVX, that they're more valuable to us as a subscriber than as a person that we can sell advertising to. So we are much, much more kind of sophisticated about how we promote the upsell.
Then, your second question was around pricing on Planet V, I think. The way we do it is we've got a floor price, and then advertisers choose to add on extra targeting and functionality to their sale, and they pay more for that. The commercial team have been really good at adding new products, working with agencies to identify products that advertisers find really valuable. Through that, we've been able to raise the CPM, the cost per thousand, by double digit, since last year.
Great. Thank you so much. Super clear.
Thank you very much. There are no further questions. I will hand back to Carolyn to conclude.
Just to say thank you very much for joining us. I know it's a very, very busy day for results out there, so big thanks from the ITV team to all of you. Bye for now.