ITV PLC
LSE:ITV
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
0.7106
84.5
|
| Price Target |
|
We'll email you a reminder when the closing price reaches GBX.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
ITV PLC
You don't have any saved screeners yet
Good morning, everyone. Thank you for joining us for our interim 2021 Q&A. I'm joined here, of course, today by Chris Kennedy to answer your questions with me. I hope many of you have already had a chance to watch our webcast. But I thought for those of you who hadn't, I'd just give you a quick overview before we start questions. And I really apologize for those people who have actually seen the whole presentation, it's a bit repetitive, but I'll try and keep that quick.So ITV delivered a really strong performance in H1 as we continue to manage and mitigate the challenges presented by COVID. Total external revenue, to remind you, was up 27%, EPS more than doubled to 5.9p. This does reflect the innovation and agility of our Studios teams, and they've shown that by keeping production running. The strong recovery in the ad market, up 29% compared to 2020. Within that, AVOD revenues were up 55%. And actually, if we look through 2 years to 2019, TAR was up 2% over H1. Our tight control of costs, delivering GBP 21 million of savings in H1, GBP 15 million of those are permanent and also the progress we're making in delivering our strategic priorities. We set out our More than TV strategy as you remember, in July 2018, and we've completed the first phase of this, delivering our key priorities across our 4 pillars of value. First, Studios, it's now world-class international production and distribution company and one of the largest independent producers globally.Second, our linear broadcast channels which have maintained their unique ability to drive live mass audiences in a trusted environment and they play a critical part in the majority of marketing campaigns. Third, streaming where ITV Hub is capturing the shift to online viewing the strong demand for online advertising. The rollout of Planet V provides advertisers with targeted advertising in a brand-safe environment. And finally, direct-to-consumer where our number of subscriptions is growing strongly as we monetize our best of British content in the U.K. and internationally. We do emerge stronger from the pandemic, but of course, there remain risks associated with it. While the majority of our programs remain in production, we expect there to be continued challenges affecting drama, shows with audiences and multi-location filming. Advertising comparatives will get tougher in H2, but demand for advertising remains strong. July is expected to be up 68%; August, up 17% to 20%. It's too early to give a range for September given the current uncertainty, but we expect it to be positive.Our financial position is robust. We're confident about the future, and the Board recognizes the importance of the dividend for ITV shareholders, assuming the economy continues to recover. The board intends to resume the dividend with a notional 5p full year dividend. Given the current uncertainty, the Board will not pay an interim dividend, but intends to propose a final dividend of 3.3p for the full year 2021. That's based on 2/3 of the notional full year dividend. The Board intends to grow the ordinary dividend over time whilst balancing further investment behind our strategy and our commitment to investment-grade metrics.As I said in the presentation, we're now entering the next phase of our strategy, and we're really looking forward to discussing this with you in much more detail. We will hold 2 investor seminars in the autumn to do deeper dives into ITV Studios and into Media and Entertainment as a division.I will now hand over to you for questions. If you would like to ask a question, please use the conference call facility, the details of which are in our announcement this morning, and the operator will open up your line.
[Operator Instructions] The first question today comes from Jo Barnet-Lamb at Crédit Suisse.
It's Jo from Crédit Suisse. A couple of questions around Studios and one on advertising, if I may. So firstly, with regards to your comment on some pull forward of Studios revenues in 1H. Are you able to quantify or give any color on the scale of that benefit? Secondly, a higher level question around COVID recovery in Studios. You speak about the substantial majority of your programs being back in production. But clearly, COVID is still having an impact on the speed with which you can film and the costs associated. Can you talk a little bit about Freedom Day on the 19th of July, then the pingdemic and their impact on Studios? And more broadly, what needs to happen to get studios truly back to pre-pandemic levels? And then thirdly and finally, on advertising. There have clearly been significant distortions around advertising over the last year to say the least. When you think about the 2-year stack into 4Q, based on your conversations with advertisers, once growth may moderate, do you see any reason why that should reverse? And any color you can give around that would be great.
Okay. I'm going to try that in reverse order, if that's all right. And I'll get Chris in to the first question you asked on Studios. But we'll do that last if that's all right with you. I think on the advertising market, look, it's a really strong rebound and it's definitely across all categories. The only category would be travel, where travel and counter tourism where you're not seeing a rebound at all, and that's for obvious reasons. And so you're right about some distortion because of -- obviously, there's been distortion, but that actually, the distortion is that everybody virtually was down, except online retailers through COVID. So it's not -- I'm not sure that's a distortion. It's just a complete stopping really of doing advertising activity over a lockdown where people were not able to go out and buy and they could only really buy products online. So I think actually when you look at it over 2 years, the fact that we've grown the advertising, when we look through to 2019, that is incredibly positive. That's a really fantastic signal, I think, for the future. And I think there are a number of factors with this. There is pent-up demand. There is the need, I think, to encourage footfall into physical spaces. And so that is combined with advertising online presence is important. I think that actually because nothing has actually completely resumed normality in terms of going back to 2019, the media have been much, much more affected than TV. So if you're an outdoor company or you're radio or you're cinema, people are not out and about. And so there's definitely been a positive flip for us. But I also think advertisers have really, really had to think about what they're doing and how they're spending their money.I think they've always done that, but I think they've reevaluated TV a bit in that mix because what you can do now in TV with ITV is you've got that mass reach, brand safe environment and the emotional messaging that you can get across and the tone of that messaging. Really you can't do that in any other medium. And so that's -- people realize how important that emotional connection with their customers or their potential customers are. And then, of course, with Planet V, you've got programmatic, the personalized targeted advertising, self-serve, 90% now is self-serve. It's a formidable tool for them to use an addition to it. And I think that reevaluation of what you can now get from TV is also a factor which is, I think, standing off in very good stead and will stand us in very good stead for the future. I hope I've answered your question on advertising. Would you add anything to that?
No. Just -- I suppose just in terms of -- as the comparators unwind. It's worth noting that Q4 saw growth in both 2019 and 2020. So comparators do definitely get tougher as we go into the end of the year.
Yes. And then on the COVID recovery in Studios, you're right, I think, to ask those kind of more granular questions about what needs to happen. I think the one thing to really bear in mind about Studios it's not a U.K. business. It's a U.K. plus highly global business. So whether that's Europe, Western Europe, in particular, where we're very strong or America, there are all sorts of regulations, and they differ by market. So we're tracking those. We're watching and monitoring that. And of course, the ping is being called the pingdemic is just one more hurdle that we have to navigate in production. So I think you're right to talk about the fact that it's not easy to produce shows, it's certainly difficult to produce multi-location dramas with travel restrictions as they are. It's -- we have to think very hard about where we have live audiences in our entertainment shows, which sometimes really benefit from having a live audience. And our plan on that is to take that case by case and to look at the venue, to look at the situation, to look at the show itself to look at what we can do, and obviously, we'll do it in a very safe way. But we will bring back live audiences, but it will be case by case by show in the first instance. So all sorts of things, and there are costs associated with producing all programs in a pandemic, and that is an industry-wide issue. It's not a specific ITV issue. And that, of course, makes the margin a real focus because it's something we know we want to grow, to build. But it's going to take time to do that because the pandemic is not over, and every country is dealing with it differently. All the regulations are different. Do you want to say anything else?
No.
Do you want to take that Studios pull forward?
So yes, in terms of the revenue that's pulled forward, I mean we've always said that the Studios revenue is lumpy because it depends on the delivery of programs. And we're really pleased with the first half, but it was flattered by some of the early delivery, particularly U.S. dramas and then a couple of licenses in global formats and distribution. So in terms of how much, what we've said is that we don't expect the outlook for the Studios business to change. So Jo, you can probably do the addition and subtraction on that.
Our next question is from Julien Roch of Barclays.
It's Julien Roch with Barclays. First question on BritBox, subscribers in the U.K. went from 500 to 555. Can we have an idea of revenue for the first half, at least ARPU. I assume there are some promotions in there. So ARPU is likely to be lower than 599 less 20% of VAT. Second question is, can we have an idea of how much of either full year '20 or full year '21 external revenue in Studios comes from SVOD platform? You said in the release, it would double this year, which is great, but we don't know the starting or the ending point. And last question is lots of exceptional this year, both income statement and cash flow statement, earnout, COVID. So it's an exceptional year for exceptionals, but what level of exceptional next year on a normal year can we expect going forward?
Yes. On exceptions, Julien, you're right, it's an exceptional year, and you'll see particularly acquisition-related exceptionals coming down dramatically in future years. So I would expect -- and we haven't given guidance, but it will be in the low tens of millions going forward.
Do you want to take the external revenue on OTT?
Yes, external revenues on OTT, I mean we've as you know, we've never broken out OTT revenues externally. And it's also becoming -- things are blurring because when particularly as sort of networks start to launch their own streaming services. If we're getting a commission, a bit like ITV, we're starting to look at one content budget. We use it everywhere. We'll use it on linear, we'll use it on subscription. We'll use it on ad funded video on demand. And increasingly, our customers are doing that as well. So it's actually quite difficult to give you a number because we don't know the end destination. We know the customer, obviously.
I mean what I'll say on that before the next question is just to say that I suppose we are still targeting to double our revenues, and I know that doesn't give you specifics in terms of the numbers. But I think you see the intention and the direction of travel. So doubling our revenues from streamers. And just to give you some context around that, 1/3 of ITV America Studios scripted revenue from OTT. So 1/3 of it on scripted is already coming from OTTs in America. And I think that should give you a touch point, and that's grown 60%, 6-0- percent since 2017. So that just gives you, hopefully, some touch points on OTT. But Chris' points are very valid about the market itself and how we're now viewing it.
And I think it's fair to say we're really pleased with the engagement we're getting with the OTTs, and we feel that we are getting our fair share of that content market, and it is a fast-growing market as well.
Never fair share. We're always striving for more. We're always striving for more. And we've got strategies in place in every market to do more with the OTTs. On BritBox, I'm not sure what the question was, will we be on plan, I think, Julien was that your question? Will we continue to remain on plan?
No, that was not the question. The question is, can we have an idea of revenue for the first half or an idea of ARPU. because we know the subscriber at the end of '20 and at the end of the first half, but I assume ARPU is likely to be lower than 599, less 20% of VAT because there must be some promotion.
It's -- we don't disclose it. It's still relatively low because we've only just -- most of the early subscriber base is what we call owned and operated, so it's direct with ITV, although we are now expanding distribution and particularly with Amazon channels, but that's a very recent -- a recent development.
Agreement.
Our next question is from Adrien de Saint Hilaire from Bank of America.
I've got a few, please. First of all, if I look at the schedule costs in the first half of '21, so you did GBP 522 million. Maybe the best comparison we can find historically is the first half of '18 when it was like GBP 567 million, I guess. So why is there a GBP 40 million difference? And why would we see a big pickup in the second half? That's my first question. The second question relates again to BritBox. So you've added about 50,000 subscriptions in the first half. Could we get a broad sense of your expectations for the full year? Should we see an acceleration in net adds in the second half? And then if I look at the Q2 trend in advertising, and the Q3 trends, there is a nice acceleration on the 2-year stack. Could you give us some reasons beyond this acceleration?
Okay. Do you want to go?
I was just going to say -- so yes, on schedule. So this year, there has been a few delayed dramas and also we didn't have Britain's Got Talent, which has depressed it slightly. And the euros, also the number of the euro jumped over into July as well. So that's why it's relatively lower. And obviously, you've got the difference between the Soccer World Cup and euros as well because we had the Soccer World Cup in 2018. And we're guiding to the GBP 1.1 billion for the full year. So we don't expect that to change. So that would be on schedule.
I'll take the BritBox question now. So I think on the -- just looking at it in the broader context, one of the things we really, really -- we expect to grow BritBox subscriptions, of course. We're on plan, as I said, to Julian and the plan relies on it continuing to grow. One of the things we really, really don't want to do is chase growth just because we're doing a market update because that drives incredibly bad behavior in the business. And so we're very mindful of that. So our intention is to continue to grow subs on BritBox U.K. to continue to have that trajectory. And we will do that in a number of different ways. One of the things we've said and I think, you may have picked up on is we're now looking at our NPB as kind of one content budget. So instead of having all these divisions where you've got this spend, that spend and another spend, we're actually saying what we will look at is our windowing strategy across all our platforms, and we will optimize where we believe it's best for viewers and therefore, for return. And that's quite a big step and quite a big shift. And we'll talk to you about that in more detail at the investor seminars, but it's a really important step forward because it means that we will continue to be doing originals in BritBox. And I would just say on the original issue that originals come in all kinds of shapes and sizes. You can repackage some fantastic content like the Doctor Who classics that counts as an original because you packaged it in a certain way. You might have added a bit of new material to top and tailor it and you've marketed it as an event and you get a fantastic kind of return for that. You also have things like The Beast Must Die. We've got -- we did the craze and we've got some 3 or 4 things coming up. We've got another Spitting Image coming up. So it's a combination of how you use it, but we will also -- we've been trialing and testing how we do drama drops on hub? How we might do something on BritBox then on hub then on linear? So it's just the windowing strategy is going to become even more critical going forward because the ambition here is to optimize what we do on -- across all of our platforms. The interesting thing on BritBox is that as it's matured, the churn has actually gone down. And in June, we've shown the lowest churn in the history of BritBox was actually in June this year. So as it's maturing, the churn is reducing, which is good news. And I think that kind of gives you quite broad context. I hope I've tried to answer your question in the broader sense. On the advertising, I think you said Q2, Q3 trends do you see this accelerating? I think I don't see them accelerating at all. I think we've had a massive rebound. And as I said earlier, I think it's about pent-up demand. And I think it's because everybody is now in the U.K., and it's only a U.K. ad market for us. People are going out and about. They are going into shops and there's just a huge amount of activity out there. And actually a lot of advertisers are trying to encourage that activity. They're trying to get people back to food and drink, to venues to gigs to whatever it might be at shops. So I don't see an acceleration of that advertising trend. And actually, as we've said, I think that queue -- the last quarter is a very tough comp on last year.
Absolutely. Carolyn, if I could just squeeze in one more question, if I may. So the performance financially is very commendable. There are a couple of KPIs which are somewhat heading sounds like brand consideration total viewing. Is that something which worries you and in your view may require some additional investments at some points?
What was the first one?
Brand consideration.
Brand consideration. I think the brand consideration one is something we monitor incredibly closely. And we're not unduly worried about brand consideration because actually, quite a lot of the qualitative feedback we get on the ITV brand is very positive. But there are things that we are -- we're kind of not rethinking but reshaping in how we message and how we position, and you'll see a lot more of that going forward. But we're not unduly worried. I think the ITV brand remains as strong, is a strong positioned brand. People know what it stands for and what it is. I think there's an issue there depending on the demographic you're looking at on brand consideration. And that's one of the reasons we are now shifting into the next phase of our strategy and what we do about that. I think on total viewing, it was going to be difficult this H1. We knew it was going to be difficult on total viewing because last H1 was right in the eye of the storm of lockdown. I mean everybody was at home, no one could go out. It was a legal requirement to stay at home, yes. So all viewing went up. And so that is, I think, a difficult comparator, and lots of viewing is going to come down, including streamers. I mean there's been a real slowdown in streaming subscriptions year-on-year as a result of not being in lockdown this year compared to last year. And I think that -- but you also have to -- you have to -- we have to -- we really recognize that the way people are viewing has shifted. And so it's not just about linear. It's also about all other devices, and it's the consolidated 7 days that we look at all the time. I'll give you a very good example of this with Love Island, which is that if you read the media broadly, you would think, oh, God, what's happened to Love Island. It's tanking. It couldn't be further from the truth. The overnights are that -- what we say the overnight is to get the rating, the next stage for people who watched it at 9 o'clock are around 2 million, but the consolidated viewing for Love Island is 4.2 million and has peaked at 4.5 million, 4.6 million, 4.7 million. We're really, really pleased with that. So that just shows you the kind of shifts in viewing. So the total viewing there is actually very strong. And the market doesn't always look at that. They're still quite geared up to the overnight because everyone gets the overnight. Does that make sense?
It makes a lot of sense. Thank you very much, Carolyn for the detailed answer.
Our next question then comes from Patrick Wellington at Morgan Stanley.
A couple of things. Firstly, I'm 2 weeks behind on Love Island. So don't tell me what he goes up to. Secondly, just on the dividend, you're going to pay 5p. Are you going to pay 5p in 2022? Or is that a medium-term target? Next question, you did your deal recently with Sky. We've talked in the past about payments from Sky to ITV. Have you seen an increase in those Sky payments as part of this new deal? Can you give us some sort of idea? And then a sort of joint question on a number of items, which is you've got high-fat, sugar, salt regulation coming in at the start of 2023. But as you say, you have a sympathetic white paper about public service broadcasters and the future of public service broadcasting. Do you see a sort of quid pro quo where the watershed might come in on junk food, but you are, for instance, allowed to buy Channel 4 and another GBP 1 billion of advertising in Channel 4, do you think you'd be allowed to own Channel 4? And have you considered it? And what do you think the reaction of the regulator would be?
Okay.
Should I start with the dividend?
Yes.
So Patrick, the 5p is a floor. So we intend to grow it but that's the level we know we can sustain and then grow over time. And we're going to pay a final based on that 5p. So we'll pay 2/3 of the 5p for 2021. And then 2022, obviously, we'll make the decision on the level of dividend later, but it won't be less than 5p.
On Sky, what we would say is that we're really -- we're very pleased. I think if you talk to Sky and if you talk to ITV, you'd say both parties would say we're very happy with how we've worked together on this new agreement. We are very aligned about what we want on the platform. It's very viewer centric. It's also very advertising centric. We will be on Sky Q in 2022, by the end of 2022. That gives us even more opportunities and we get the extra inventory for Hub almost immediately. As soon as Hub goes on to the platform, we will start getting extra ad inventory. So they're all very, very positive. So I think you should just see the Sky deal. We can't really go into much commercial detail, for obvious reasons sensitive, but it's a really good deal. We're working well with them. We intend to continue to do that. On the joint questions, I'll just take some of them and then chip in. On HFSS, you're absolutely right. I mean we don't know the detail of that yet, except to say that it's 2023 now, January 2023. I think loosely still because although it's been stated, there will be a pre- 9 o' clock ban and an online ban the way that online ban is implemented is yet to be decided or kind of worked out, if you like. And so until that happens, we won't know. And the other thing we're now working. We're talking to DCMS in particular, about what exactly is included in what isn't included. So it's too early to go into what does that actually mean for ITV. And obviously, as you'd expect, we are scenario planning and we are looking at mitigations every which way we can. The quid pro quo, I don't think the government see it like that. Although I think that the government. What I've been very encouraged by is that the government and DCMS have really got the issues, i.e., that the world has completely changed since 2003, and that the value of PSB is enormous to Britain, and that something has to be done to update that 2003 Broadcasting Act. Just to be clear, it's Ofcom that's come out with the PSB paper, where they completely recognize the criticality of prominence and inclusion of PSBs on platforms. We wait to see what they say more on fair value, which is something that we believe very strongly has to be taken into account. Where if you can't do a commercial deal with a platform because they have undue dominance, then Ofcom should be able to intervene in that. But that's a little bit less clear, I think. The government's white paper will be coming out towards the end of this year. So autumn, we hope this year. And I think they are also quite clear on the things Ofcom has talked about, and we look forward to seeing what else they say. On Channel 4, Patrick, you wouldn't expect me to say anything about that. I mean we never speculate. We wouldn't comment on something like that. The only thing I will say is that we believe that PSB remit of Channel 4 is important to the PSB ecology and that we feel that has to be preserved and maintained going forward, whatever the government decide to do. And it is a government decision thus.
And Carolyn, you've probably seen -- you will have seen TF1 and M6 are being allowed to merge, and they're going to have 70-odd percent of advertising share in France. I mean, is there any reason why a combined ITV, Channel 4 couldn't exist in the future on the same basis?
Well, this -- in this country, as you well know, it's a CMA issue. And all I would say on that is that the ad market in the U.K. has changed beyond belief over the last 15 years and particularly over the last 10 years. And we find ourselves competing with a whole new set of competition in the ad market. Facebook and Google being the obvious examples, but also Snap, Twitter, they all carry advertising. It's all digital advertising, and it all comes from the advertisers that use TV and cinema and posters. So I would -- I think the ad market has shifted fundamentally and that has to be recognized.
Next up, we have Richard Eary from UBS.
Patrick has stolen a little bit of my thunder on Sky and PSB, but I still got a couple of questions. The first one just is on Talpa. Chris, obviously, the exceptional costs have gone up to GBP 310 million from GBP 190 million. Can you just maybe just elaborate what happened with Talpa and so why those costs have gone up? I presume that should be positive given the Talpa should be performing better. That's the first question. The second question just goes on fact, I think an earlier question on Studios. I mean you're saying you don't expect the outlook to change. Can you just confirm that you're actually happy then with where consensus sits for the full year? And maybe the last question, just on cost savings. I look at the cost savings targets haven't changed, but I didn't know whether it's going to -- that to change as we go into '22, '23, depending on how things shape.
Yes. So starting with Talpa, you're right. It was a performance-based final payment on the earnout. And obviously, it's performed well, which is why it's triggering the earnout. We did -- we were -- we did say it would be uncertain in the annual report, and we gave a range, and this outcome is within the range that we guided then. And obviously, this is the last payment now that goes out in August. And as I said earlier then acquisition-related exceptionals are going to come down dramatically going forward. So that's Talpa. Studios, yes, we're happy with full year consensus. So we wouldn't be expecting that to move very much. And then on costs, yes, we've reiterated the GBP 30 million. We've also talked about GBP 8 million of temporary savings this year just because we're still working in lockdown. So that reduces office costs and T&E and so on. Looking further forward, I mean, we've got our GBP 100 million target to 2022. But we're not -- we won't stop there because it's right that we continue to look at the cost base. And we already started a desktop exercise to look at what savings we could achieve beyond 2022. And by looking forward on a multiyear basis, you can start to look at structural changes. So in particular, in the traditional broadcast supply chain, those are typically long-term contracts. A lot of those are coming up for renewal or extension in the coming years, and we think that there's more to come on the cost front, particularly in the supply chain. And clearly, that then frees up money for us to invest in the new forms of streaming and so on, but also to deliver to the bottom line.
Great. Can I just ask one follow-up? Just with obviously, working capital in the first half was obviously negative. I presume that's due to obviously the ramp-up in studio productions, where do we think that lands full year? I may have missed that in terms of some of the presentations.
Yes. So -- and also in the first half, we had the GBP 75 million of VAT that deferred from 2020 being paid. And what we've said is that for the full year, we'll have 30% cash conversion. And when you look at 2020 and 2021 together, that will be at the 80% to 85% long-run cash conversion rate because as you said last year, we had a significant working capital benefit.
Okay. I'll do the numbers.
Our next question comes from Matti Littunen from Bernstein.
The first question on ITV Hub. So as you extend the catch-up window on that service and add more box sets. Do you have any color on how the total catalog hours on that service are trending or better yet, any numbers? And then second one on the deal with Sky. Should we see this as completely separate from the conversations around the, say, the Sky Q -- getting the Sky Q to have direct carriage on -- sorry, BritBox to have direct carriage on Sky Q. And on the other hand, the PSB debate you were talking about, where you've been sort of on different sides of the conversation with Sky previously. So should we see those as entirely separate? Or does this deal maybe make it easier to find common ground with Sky on those other 2 things?
No, great question on Sky. I'll let Chris comment on the BritBox side of that. I mean, I don't think it -- I think what I would say is that on the -- one of the things that we were able to resolve within our overall and very broad agreement with Sky is some of the issues that we had voiced before about PVRing et cetera. So we certainly have found a way through that, and that is encompassed in this agreement. So it is a real step forward.
Yes. And on BritBox, we're having really constructive conversations. There are some technical issues there, but watch the space.
And then on the Hub, I think you're saying we're putting more hours on Hub and how -- give you some color on that. I honestly think that's too early to say. I think we're still in -- you're right, we've increased the window to a year. We're building up the volume on Hub, which we really do need to do to make it a destination rather than just a catch-up service. So we're still, I would say, on the pathway of building it into a destination is not a complete destination yet. So the change of hours at the 1-month window to the 12-month window and actually trialing a whole load of other things, putting on more box sets and stuff is we are constantly monitoring that, see what effect it has on Hub, see what effect it has on ITV 1 or 2 and then also see what effect it has on BritBox. And we're balancing all of that on a kind of almost weekly basis. And it's too early, I think, to come up with anything definitive for you about trending. I mean you would expect obviously, that the more hours Hub has, the more boxset Hub has, the more viewers Hub gets. And that is what's materialized. Hub is up 6%, monthly active users are up. So viewings up, monthly active users are up and dwell time is up by about 4%. So all of those trends are going in the right direction for Hub. And I would say that our strategic vision is very much about having an AVOD led strategy. We are a market leader. We are the market leader in advertising in this country. We need to continue to remain a leader in advertising. And AVOD is a very, very important part of that. So we're developing all of that, but it requires Hub to have content, to have volume of content and to have fresh content on occasion. We also want to have a compelling SVOD service, and we are clever, I think, in the way that we are doing that on BritBox. But as I said to somebody else, that is evolving and we will iterate and we will continue to test and trial. So that gives you some color, I hope, although it probably doesn't give you as much as you would want on definitive trends.
Next question comes from Nizla Naizer from Deutsche Bank.
I have 3 questions from my end. The first is a comment on your release where you mentioned that during the H1 period, the online brands -- revenue from online brands was up 37%. I'm just curious to understand with the easing of lockdown measures that you're seeing starting July, has that decreased? Or is the momentum still strong? And how much of revenue do these online brands now contribute to in the advertising pie? The second question is on Q3. Could you remind us how big is September typically for ITV compared to July and August? And how did these 3 months do last year in Q3? And my last question is on your leverage targeted. With the increase in Talpa, you're mentioning that the leverage will go up to 0.9x. Do you have a leverage target that you specified, could you kindly remind us? And as a part of that target, would you consider M&A? Could you remind us what your sort of M&A objectives might be in the future?
How do you want to do this?
Let's -- well, let's start with online brands. Yes, you're right. Really pleased with the 7% growth in H1 and momentum has continued into H2. I think it's a combination of both those online brands being very vibrant and relevant during lockdown. But also, it's -- thanks to the work that the commercial team have done to educate online brands, give them proof points, attract new brands to TV. And it's been a really powerful piece of work that they've done.
Yes. No. So we've had a number of initiatives to particularly attract online brands to TV. And so we run webinars. We run -- because quite a lot of nascent online brands think TV is too expensive for them. And therefore, there's a bit of education to be done. And then quite a lot of work on the effectiveness of TV, which can really, really boost them. And so we've done a lot of work, the commercial team has done a lot of work on really nurturing that. So I think, Chris is right. there is natural momentum from online brands, but we've really worked very hard to ensure that we are attracting them and actually getting them to experiment with us even when they're not thinking about TV. And revenue online?
So Q3, I mean, last year, July was down 23%. August was then up 3% and then September was down 2%. So we sort of came out of lockdown. So the last bit of lockdown impact was in July last year. And typically, September is around 40% of our revenue. If you look back to a normal year, sort of 2019, but July has been exceptionally strong this year. So we're not expecting September to be as much as 40% of Q3. And what we said is it's very early because we don't have any late booking fees. So advertisers are taking advantage of that. And I think that, that is also helping brands to come to TV because they can book VOD later and not having the booking fee on linear is also helping them to manage their campaigns. So we don't have as much visibility on September, but what we said is we're positive. So if you assume September was flat, it would still have a very positive Q3 result.
Leverage.
Leverage, we say investment-grade metrics. One of the key is the leverage. And the rating agencies look at it differently from our reported number, but broadly speaking, 1.5x unadjusted leverage is equivalent to the cusp of investment grade. So we'd like to keep it below 1.5.
And then you ended by saying where are you on M&A. I think our answer to that would be that we are very focused on the strategy, as you can tell. We have so much to still do, even though we're past Phase 1, we've delivered a lot in Phase 1. Phase 2 is actually acceleration. It's about pace, it's about speed, it's about ways of working. It's about digital transformation. There's a huge amount still to do. So we're very focused on that. And I think our definite preference is organic growth. So when you look at Studios, where we've made in the past, most of our acquisitions, we would say that actually doing that organically by backing talent instead of buying companies has been incredibly effective for us over the last couple of years. So when you look at some of the things that we've done with Nicola Shindler, Patrick Spence, Dominic Treadwell-Collins. There's a whole list of names I could give you where we back them rather than buy the companies they've been in or they founded. That organic strategy is what I see us doing more of -- continuing to do more of.
Our last question today comes from Steve Liechti from Numis.
Can you just have a thought about next year in 2022, given the revenue performance in TAR in this year and sort of up and down obviously in the last 2 years. Do you think sitting where you are right now, and what you see that revenue from TAR next year would increase year-on-year on '21? And if you do or don't want to say anything about that, do you just want to go through the moving parts might get us to a logical answer on that you see from where you are now?
Okay. I mean, look, obviously, we wouldn't be able to say anything about that now because that would be guidance. And actually, we're not capable of giving you that guidance even if we could because I think it is too hard to see through at the moment. And so I think the moving parts question is a much better question, in a way, for us to try and answer because so much of what the advertising market is about is confidence. It's about consumer confidence and therefore, advertiser confidence and it's about the economy. And so it is going to be very dependent on the economic recovery that we're seeing and continued GDP growth. That's the single biggest determinant really to this advertising market. And we are -- we would say we are cautiously optimistic about that, but there are still -- we talked about earlier on the pandemic is here. It's here to stay for some time. What is that going to mean in terms of businesses? Are businesses going to be able to continue to function properly? Are they going to be able to be efficient on their costs going forward? Take out some of those quite high COVID-related costs. All of those things are the moving parts. Are they going to continue to be able to do manufacturing when people have to isolate if they've been in the vicinity in the whole ping thing. There's just a number of things, travel restrictions. Are they -- how far are they going to be lifted? Are we going to have vaccination passports. Are they going to be travel corridors? Those are the moving parts. It's all about getting the economy into a sustained positive confident level. That's the biggest determinant, I think, for the ad market. Okay. I think that's the end of your questions. And I just want to thank you from all of the ITV team for joining us this morning, and we look forward to seeing you all soon. Bye for now.