ITV Q1 Trading Update: Revenue Growth and Discussions with Sky Over M&E Sale

ITV Q1 2026 results: steady overall growth, with digital and Studios doing the heavy lifting

ITV’s first-quarter trading update is one of those announcements that looks fairly calm on the surface, but there is quite a lot going on underneath. The headline numbers were broadly in line with expectations, with total external revenue up 1% to £766 million and total revenue flat at £877 million.

The main story is pretty clear. ITV Studios and digital revenue are growing, while traditional broadcast advertising is still under pressure. That matters because it shows ITV’s strategy is moving in the right direction, even if the old TV business is not exactly making life easy.

Key ITV Q1 2026 numbers retail investors should know

Metric	Q1 2026	Q1 2025	Change
Total revenue	£877 million	£875 million	Flat
Total external revenue	£766 million	£756 million	+1%
ITV Studios revenue	£400 million	£386 million	+4%
M&E revenue	£477 million	£489 million	-2%
Total advertising revenue	£416 million	£423 million	-2% (management said -1.5%)
Non-advertising revenue	£461 million	£452 million	+2%
Total digital revenue	£149 million	£133 million	+12%
Total streaming hours	692 million	614 million	+13%
Net debt	£592 million	£566 million at 31 December 2025	Higher

ITV Studios revenue growth is the strongest sign that the strategy is working

ITV Studios delivered a solid quarter, with total revenue up 4% and external revenue up 8%. That external figure matters more than it might sound, because it reflects demand from third-party buyers such as Netflix, Disney+ and Peacock rather than just selling content internally around the ITV group.

ITV specifically pointed to deliveries including Skyscraper Live for Netflix, Rivals S2 for Disney+, and Love Island US: Beyond the Villa S2 for Peacock. In plain English, ITV is making money not just from owning TV channels, but from producing and selling shows into the global streaming ecosystem. That is attractive because it diversifies the business away from the UK advertising market.

There was a weaker point inside Studios too. Internal revenue fell 7%, which ITV said was expected, because of lower volumes of Soaps and Daytime content after previously announced scheduling and production changes.

My take is that this is a reasonable trade-off if external growth continues. Internal revenue can be useful, but external sales are usually the better quality story because they prove ITV’s content arm can compete internationally.

ITVX digital growth is helping offset the decline in linear TV advertising

Media & Entertainment, or M&E, had a more mixed quarter. Revenue fell 2% to £477 million, as 12% growth in digital revenue was largely offset by weaker linear advertising – meaning advertising on traditional scheduled TV channels.

Total digital revenue rose to £149 million from £133 million, while digital advertising revenue increased 14%. ITV said ITVX had a record-breaking start to the year, with total streaming hours up 13% to 692 million, helped by shows including Gone, Love Island: All Stars, and the Six Nations Championship.

That is the good news. The less good news is that ITV’s share of commercial viewing fell to 31.8% from 34.0%, and its share of the top 1,000 commercial broadcast TV programmes slipped to 90% from 91%.

So the digital push is clearly gaining traction, but the broader TV audience picture is still softening. For investors, that means ITV is in a transition period. It is building a more modern revenue mix, but it has not fully escaped the drag from legacy broadcasting.

What about advertising?

Total advertising revenue came in at £416 million versus £423 million last year. Management described that as a 1.5% decline, while the revenue table rounds it to a 2% fall.

Either way, it was better than ITV had guided. Better still, the company expects total advertising revenue to be up around 10% in Q2 2026, up around 4% in H1 2026, and it expects a strong July driven by the Men’s Football World Cup.

That matters because live sport still pulls in big audiences and advertiser demand. It does not solve the structural pressures in TV advertising, but it can absolutely give near-term revenue a useful lift.

ITV and Sky M&E sale talks: important, but still very light on detail

The biggest strategic line in the update was this: ITV said it remains in active discussions with Sky regarding a possible sale of the M&E business. That follows its November 2025 announcement, and the company said it will update the market in due course.

That is clearly significant, but investors should also be careful not to read beyond what has actually been disclosed. There is no valuation, no structure, no timetable, and no confirmation that a deal will happen. At this stage, the details are simply not disclosed.

Why does it matter? Because M&E includes the consumer-facing broadcasting and streaming operations, and any sale would be a major reshaping of ITV. It could potentially unlock value, simplify the group, or change how the market thinks about ITV’s earnings mix – but until we know the price and terms, it is impossible to judge whether it would be a great deal or merely a dramatic one.

ITV balance sheet, liquidity and guidance: stable enough, but net debt ticked higher

ITV said it had total liquidity of £1,368 million at 31 March 2026, made up of £268 million of cash and £1,100 million of committed undrawn facilities. That suggests the group has decent financial flexibility.

Net debt was £592 million, up from £566 million at 31 December 2025. That is not alarming from this update alone, but it is worth watching, particularly if trading conditions become tougher or if strategic activity ramps up.

The company kept full-year guidance unchanged. ITV Studios is still expected to deliver good revenue growth, ahead of the market, but with margin at the lower end of the 13% to 15% range because of the revenue mix this year.

That margin comment is important. Growth is welcome, but if it comes with a weaker mix, profit conversion can be less exciting than the top-line numbers first suggest.

What this ITV trading update means for retail investors

My overall read is mildly positive. ITV is not firing on every cylinder, but the key strategic areas – Studios and digital – are growing, and Q1 came in as expected with advertising slightly better than feared.

The most encouraging part is that digital growth does not look theoretical anymore. ITVX is adding viewing hours, digital revenue is climbing, and Studios is landing work with major streaming platforms. That gives the business more than one route to growth.

The negatives are also real. Linear advertising remains weak, audience share has slipped, M&E revenue fell, and there is still uncertainty around what a potential Sky deal would actually look like.

For now, this feels like an update that supports the existing investment case rather than transforms it. ITV looks like a company in transition, making credible progress, but still carrying enough old-media baggage to stop investors getting too carried away.

If the Q2 advertising rebound arrives as guided and the company can show more profitable digital growth through the year, sentiment could improve. If Sky talks turn into a concrete proposal, that could become the much bigger catalyst – but until then, it is one to watch rather than one to bank on.