Earnings Transcript for ITVPF - Q2 Fiscal Year 2020

Carolyn McCall: Good morning, everyone. Thank you for joining us today for ITV's 2020 Interim Results. In a moment, Chris will present our operational and financial performance for the half. I'll talk you through our response to and operations on the COVID-19 and update you on our strategic progress and priorities going forward. We will then, of course, have time for questions. ITV took swift action to manage and mitigate the impact of COVID-19, our overriding priority was our colleagues and their safety while working from home or while they were producing programs. The majority transitioned seamlessly to homeworking, benefiting from the investment we've made in technology and systems. Those who needed to continue to work on-site was subject to robust safety protocols, as you'd expect. To enable our colleagues to remain feeling connected to and engaged with the wider business, I've recorded weekly VOD cast with a broad range of the ITV team and external experts. ITV is strongly committed to supporting the physical and mental wellbeing of all of our colleagues at all times, and we've leveraged our existing tools and launched new ones Big White Wall, a peer-to-peer mental health platform to support well-being. We also implemented measures to reduce costs, tightly managing our cash flow while continuing to inform and entertain the nation. Of course, ITV's operational and financial performance in the first half has been significantly impacted by the COVID-19 pandemic. Despite this disruption, we continue to work on our strategic priorities, protecting investments in them, and we are making really good progress in executing the strategy. We have continued to implement the ITV Hub acceleration plan with increased content, which is delivering strong online viewing. We're successfully rolling out Planet V. We have also extended the distribution and content on BritBox UK, which is performing ahead of our original plan, and we have augmented our data and analytics team. Now while the outlook remains uncertain today, we are seeing an upward trajectory. ITV Studios have been very innovative and agile in restarting productions. Of the 230 productions that were impacted or paused by the lockdown, around 70% have been delivered or are actually back in production as of today. We anticipate restarting further productions in the coming weeks. Our commercial team have worked, as you would expect, really closely with advertisers and agencies, but they've done that actually throughout the crisis, creating effective and relevant campaigns and bringing new advertisers to currently, we are seeing advertising trends improving into July and August. While we saw good momentum in Q1, from mid-March, the lockdown measures in the U.K. and internationally caused us to pause, as I said, almost all our productions and see a significant decline in the demand for advertising. We have seen some positive uplift in the sales of our library content in ITV Studios. Direct-to-consumer has benefited from increased demand for competitions and there has been increased demand for BritBox in the U.K. and internationally. But overall, revenues were down 17% in the first half. We've delivered £51 million of savings in H1, but profits were down 50%, with the margins of both businesses significantly impacted by the decline in revenue, ongoing fixed costs and our essential investments to support the strategy. Profit cash conversion was strong. We continue to have good access to liquidity. I will now hand you over to Chris to go through our financial and operating performance in a bit more detail.

Chris Kennedy: Thanks, Carolyn. Good morning, everyone. I'll start with the performance of Studios. ITV Studios started 2020 with good momentum, expecting a good slate of deliveries over the full year 2020 with good momentum, expecting a good slate of deliveries over the full year and year-on-year revenue growth. COVID-19 has changed this outlook. The resulting delay in the production and delivery of our programs has caused ITV Studios total revenue to decline by 17% in the first half of 2020 to £630 million with external revenue down 18% to £397 million. ITV Studios US with the region to show revenue growth in the period, benefiting from an increase in revenues from over-the-top platforms. Global distribution also saw revenue growth up 2%, with demand for the library content. However, this was more than offset by a decline in global format sales. Total organic revenue at constant currency was down 17%. Adjusted EBITA was down 47% year-on-year at £62 million, with the adjusted EBITA margin at 10%. ITV Studios is a largely variable cost business. The decline in margin reflects the ongoing fixed cost in the business and costs associated with social distancing guidelines and health and safety protocols, partly offset by £26 million of cost savings. The impact on the rest of this year and 2021 will depend on how quickly COVID restrictions are reduced. For instance, with a 1-meter rule, we can make entertainment shows without an audience but would need an exemption to make drama at scale and local travel quarantines makes multi-location filming impossible. Moving on to broadcast. Broadcast total revenue was down 17% in the first half at £824 million. This decline was entirely driven by a decrease in total advertising revenue, which was down 21%. Online advertising revenues were down just 3% within that, benefiting from a very strong Q1 with Winter Love Island. Following the third quarter of successive growth in advertising in Q1 and the COVID-19 pandemic had a significant negative impact on advertising demand in Q2, which was down 43%, the most severe decline in the history of ITV. Direct-to-consumer revenue grew 8% to £43 million, with growth driven by interactive. Our competitions have seen strong engagements over the period, corresponding with the increase in viewing of our daytime shows, along with the return of Saturday Night Takeaway. Other revenue increased by 9% to £74 million and includes revenue from BritBox UK, which has seen good growth since its launch in 2019 and has benefited during the pandemic. Whilst we've made every effort to maintain the quality of our broadcast schedule, the program budget was lower, down £77 million, due to the postponement or cancellation of shows as a result of the pandemic, such as the European Football Championship and Love Island. We expect the program budget to return to more normal levels in 2021. We continue to manage our nonprogram costs tightly and delivered £25 million of savings. The costs overall were higher due to increased bandwidth and rights costs for the ITV Hub, greater interactive costs associated with the increase in the revenue in the period, and our investments in the ITV Hub, Planet V, Data and BritBox. The BritBox venture loss was £23 million in H1, which is consistent with our guidance for the full year. In total, despite the significant savings we've made, broadcast excluding BritBox, delivered a 15% margin down from 22% last half year due to very high operational gearing. During the pandemic, people have been watching more television, we saw ITV total viewing increased 4% in the first half. And ITV family viewing by live viewers, one of our important target audiences, increased by 8%. This was driven by strong performances from our dramas, such as White House Farm and Flesh & Blood. Entertainment, such as The Masked Singer, which was one of the most successful format launches in recent times, and Britain's Got Talent. We had innovative programming such as the virtual Grand National and most of our daytime shows are having their strongest viewing in years, including Good Morning Britain, This Morning and Loose Women. We continue to be the home of scaled mass audiences delivering 96% of all commercial audiences over 5 million and also delivering on our targeted demographics. ITV main channel share of viewing and ITV family share of viewing both declined as viewing was impacted by the volume of news output from the BBC, fewer episodes of Coronation Street and Emmerdale and lower volumes of new content following the pause in production. ITV main channel share of commercial impact, however, was up 1% to 26.2%. Online viewing has been strong, up 13%, with dwell time up 11% and a 15% increase in monthly active users. Our focus now is to keep those users and drive incremental active users and dwell time. At the start of 2020, there was good momentum in total advertising, with revenues in Q1 up 2%, however, from early March, we saw advertisers, particularly travel start to defer their advertising. As lockdown measures were implemented during March, we saw most categories reducing or stopping their spend entirely. With the decline in demand and the increased viewing, we saw significant deflation in pricing, which was down between 50% and 60%. We continue to see good demand from some online brands but overall non-gambling online advertisers were also significantly down in the first half, impacted particularly by online travel companies. The trend in July and August is improving, with July down 23% and August better than July. We're seeing spend increase in a number of the hardest-hit categories as they try to stimulate demand, including some FMCG, some retail, publishing, cars and interior furnishing. We have been and continue to work very closely with advertisers. On investments, our previously announced investments to support the strategy have not changed. We continue to expect essential investments of £18 million in the year, and BritBox venture losses are expected to be between £55 million and £60 million as guided. At the same time, we've put in place measures to reduce overhead costs by £60 million this year, of which around £10 million are permanent savings as part of the ongoing cost reduction plan, which we announced in 2018. The temporary overhead savings largely comprised of a reduction in senior management and Board pay, recruitment and pay freezes, canceling the company-wide bonus, furloughing where appropriate and reducing nonessential travel and other costs. We've delivered £51 million in the first half across the business and are on track to deliver the full amount by the end of the year. We expect the program budget to be £960 million for the full year, a higher saving than originally estimated, which is due to the cancellation of Love Island and lower than anticipated replacement programming costs. As I said earlier, these savings will reverse in 2021. Going forward, we continue to look at ways to reduce our cost base permanently, and we are still targeting a further £25 million to £30 million of savings by 2022. Turning to adjusted and statutory results. Adjusted earnings for the year were down 52% to £118 million, and adjusted EPS also declined 53% to 2.9p. Adjusted financing costs were down £2 million year-on-year, reflecting slightly lower levels of debt in the period and are expected to be around £40 million over the full year. The adjusted tax rate was 20%, and we expect it to remain between 18% and 19% over the medium term. Statutory EPS decreased by 90% to 0.5p. Net exceptional items were £89 million. Acquisition-related costs of £10 million were lower than in previous years as were restructuring and reorganization. COVID-related costs were £27 million and include impairments, mainly in relation to sports rights due to the change in scheduling of the euros. Costs associated with the closure of ITV Studios productions and their subsequent safe restart and incremental costs to maintain the production of daytime program during the lockdown. Other exceptional costs were £49 million, including an estimate of the settlement of the Box Clever case and the impairments of some other sports rights costs, which were not directly COVID-19 related. Over the full year, our current best estimates of exceptionals is £110 million, which includes £35 million of COVID-related costs. Our cash conversion was strong at 138% on a rolling 12-month basis, this was driven by large working capital inflow arising from a reduction in program stock, where we delivered some programs but were unable to continue producing and the deferral of VAT payments, which we've agreed with the tax authorities. We expect the majority of this inflow to reverse in the second half of 2020 and in the first half of 2021. It remains our objective to run an efficient balance sheet and to manage our capital structure over the medium term, consistent with investment-grade metrics. Our reported net debt at the end of the period was £783 million, including IFRS 16 lease liabilities. With reported net debt to adjusted EBITDA of 1.3x on a rolling 12-month basis, and adjusted net debt to adjusted EBITDA, which better reflects how the credit agencies look at us of 1.6x on a rolling 12-month basis. We have good access to liquidity with £829 million of undrawn facilities. We have an undrawn £630 million revolving credit facility in place until 2023, which has leverage and interest covenants. Although we're trading comfortably within our covenants, as a precautionary measure, we've agreed with our banking group that for the period from March 31, 2020, to 30th of December 2021, the existing covenants will be replaced by a capital net debt and a minimum covenant liquidity requirement. We also have a bilateral financing facility of £300 million, which is free of financial covenants and in March 2020, we extended its maturity by 5 years to 30th of June 2026, £199 million of the bilateral is unused. We have no bond repayments until September 2022. And finally, our pension schemes are reporting a surplus of £26 million. The movement since the end of December reflects a decrease in bond yields, offset by a reduction in gilt yields and our deficit funding contributions in period. I'll finish by running through the 2020 planning assumptions. These are based on our current best view, but of course, it will depend on how events unfold over the rest of the year. I've talked you through most of the P&L assumptions. On the cash side, we expect profit to cash conversion of around 75%. And like all businesses in 2020, we will have to pay 6 quarters of corporation tax rather than 4, although this is offset by the agreed deferral of VAT payments into next year. And due to our successful cost and working capital management, we're able to resume our essential CapEx at around £85 million to £95 million for the year, broadly in line with our original guidance. And this principally relates to the costs associated with Planet V, the integration of Talpa and our U.S. property moves. Exceptional cash items will be around £250 million, which includes COVID-related costs and the final element of the Talpa earn-out. And pension deficit funding is expected to be £59 million, which is lower than 2019 due to the agreed deferment that we agreed with the trustees. I'll now hand back to Carolyn.

Carolyn McCall: Thank you, Chris. As you know, our aim is to be a digitally led media and entertainment company that creates and brings our brilliant content to audiences wherever, whenever and however they choose. As you would expect, we've reviewed our strategy and priorities in light of COVID, and the outcome has been a reinforcement of the strategic vision for more than TV, with acceleration in specific areas. We remain focused on 3 priorities

Carolyn McCall: Turning now to broadcast. The key priority at the start of the pandemic was to keep ITV on-air and the ITV Hub and BritBox fully operational. We broadcast over 10 hours of live programming every single weekday with our daytime and news programs, and we have played a key part in providing our viewers with accurate and trustworthy information during the pandemic. Our commercial team worked really closely with our advertisers and agencies to create relevant and innovative marketing and advertising opportunities, BT technology tips, for example, Waitrose Pick for Britain and The People's Ad Break. With weekly e-mails and frequent webinars, which are over 3,000 people viewed, we were able to use our breadth of experience, creativity and our unique platform to bring new campaigns and new brands to TV, such as Mindful Chef, Peanut, Bionic and even Life Boy Soap who haven't advertised since 1978 on TV. Significant price deflation helps encourage advertisers to TV and delivered really successful campaigns. Our challenge, of course, is now to keep them. We have a significant new B2B initiative, ITV backing business to drive their growth and revenues. Now this initiative includes using our creativity to provide marketing support and digital content, information to help advertisers create really effective campaigns, giving consumer insights to help advertisers stay close to their customers, sharing success stories from business leaders with Business Get Talking, providing relevant support to help digital-native brands, brands that are new to TV and specific sectors, which have been hit particularly hard by COVID, such as charities, universities and cultural heritage. We've developed a new ad format on the ITV Hub, Hub shout outs to provide a cost-effective alternative to a full linear advertising campaign, and we're making booking advertising with ITV more flexible, such as removing late booking charges and launching special offers and incentives. Now increasing booking flexibility will make it a bit more difficult to give to our guidance going forward. The ITV Hub has grown rapidly again in H1 as we have continued to deliver the Hub acceleration plan. Our investment has been focused on redesigning the interface on all platforms to continue to improve the overall user experience, increasing personalization and prominence to make it a destination for viewing our content, strengthening the content available. For example, we showed the 1996 European football Championship and the 2003 Rugby World Cup for those viewers missing sport, both of which performed really strongly. We're trialing an extended catch-up window for content on Hub during the summer, and we've redesigned the ITV News online site. It's massively improved. We are continuing to successfully roll out Planet V of scales programmatic addressable advertising platform to agencies. This platform puts the buying in advertisers' hands, enabling them from their own terminals to buy ITV Hub inventory seamlessly and cost effectively build their own audiences, add their own data and monitor their own campaigns. In July, 35% of VOD inventory was delivered through Planet V. While our schedule has been impacted by production stoppages this summer, and we have used more repeats, we continue to invest in the schedule and have a really strong slate for the autumn. This tape shows that, together with some of our highlights of H1. [Audio/Video Presentation]

Carolyn McCall: Turning now to our direct-to-consumer business, where we have seen a positive impact actually from COVID. We've seen good growth in our interactive revenue as we've improved the ITV Win platform and extended our competitions. We have, however, had to close all our live events and tours. BritBox UK, as I said, has seen good growth in subscriptions in the period. And as expected, the lockdown restrictions increased the number of customers signing up for the free trial period. Encouragingly, we've continued to see strong subscriber appeal with conversion and churn rates tracking in line with our expectations. We have extended the distribution of BritBox UK. with a service now available to 60% of streaming households and on around 20 million devices, up from 15 million devices in March. We have also strengthened content with channel for programming becoming available in April. We've just announced partnerships through a Shakespeare Company, the Donmar Theatre, the Royal Ballet and the Royal Opera House to bring major productions to BritBox. And BritBox now has brand awareness, reaching 84%. Subscribers to BritBox US have continued to grow strongly, currently exceeding £1.2 million, and the service is profitable. We are on track to launch BritBox in Australia in the second half of 2020. Hub+ continues to perform well with around 390,000 subs. This is down from the same time last year due to the absence of Love Island. Lower volumes of content, reflecting the changes to the schedule and, of course, less demand for EU portability given travel restrictions. We have specific priorities for the rest of the year and into 2020 to continue to deliver our strategy. Firstly, in studios, key in the short-term is, of course, to resume production safely and at scale. We will continue to strengthen our talent. We are working on a number of potential opportunities as we speak. And finally, we are very focused on continuing to build and monetize a strong pipeline of programs internationally. We're focused on growing scripted, creating global formats that travel and return and diversifying our customer base and increasingly creating programs for streaming platforms worldwide. In broadcast, we will further strengthen the Hub with our focus for the rest of the year on its redesign, strengthening its user experience even further, including offering a start again option on simulcast and linear TV, along with increased content and distribution. The ITV Hub, as you know, helps ITV reach valuable younger audiences and in our drive to increase their engagement, we will be producing short-form content, particularly targeted at this demographic, and we plan to launch that later this year. We will complete the rollout of Planet V to most of the major agencies by the end of the year, and 100% of Hub inventory will be delivered through this platform by that time. Over the medium term, we will explore linear addressable opportunities. We're also further deepening our strategic and creative relationships with advertisers, which we started before COVID, of course, and we've made really good progress on that. And finally, D2C, we are continuing to grow BritBox, as you've heard, through extending its distribution and content. We are exploring opportunities to expand its distribution further and are working with a number of platforms to enable this. The first original commission, spitting image will launch on the service in the second half of 2020 with Film4 content arriving in the autumn. BritBox has also recently commissioned a number of original dramas, A Spy Among Friends starting Dominic West and then discussions with Damien Lewis; The Beast Must Die starring Cush Jumbo and Jared Harris; Crime, which is based on Irvine Welsh's novel; and Magpie Murders, which is based Anthony Horowitz's novel. These are all expected to be available in 2021, '22. We're working through the planning for a phased rollout of BritBox internationally to up to 25 countries. These are countries we have identified where research shows we could launch the surface profitably, managing our SVOD rights much more effectively and driving more value from them. Our investments in the rollout will be funded by our share of BritBox US cash flows, and we will undertake, of course, a full business case for each territory before we launch it. We continue to support Hub+ and strengthen ITV Win. We are, of course, also very focused on delivering the cost savings, which Chris has taken you through, and we're also identifying permanent savings we can make over the medium term. To do this, we will be using data and technology as we continue to transform ITV digitally, digitizing our processes even more in the content supply chain and core central functions and using our learnings from COVID, such as increased smart working and remote editing. Now on the outlook. We have taken difficult decisions to deal with the crisis, but they have put us in a really good position to continue to invest in our strategy, to transform ITV into what we have said, we want to be a digitally led media and entertainment company. And as I said, and I hope you can see, we are making really good progress. We have strong foundations. We are clear about what we need to do. It does require relentless focus on delivery to build that stronger, more diversified and structurally sound business. The next phase of the strategy will further position ITV to take advantage of these evolving viewing and advertising trends. We continue to monitor the risks associated with COVID-19 and a wide range of possible financial scenarios. Our colleagues safety and well-being continues, of course, to be an absolute priority and we are adapting our business and developing and implementing plans to address the challenges in the short and medium term, including a potential second wave. We are, as you hear, very focused on tightly managing our costs and our cash. Given the continued level of uncertainty for both ITV Studios and Broadcast, it's not possible to provide financial guidance for Q3 or for the remainder of the year. Today, we are seeing an upward trajectory, productions are restarting and advertisers are returning to take advantage of our highly effective mass reach and addressable advertising platform in a brand-safe environment. And finally, as they say on User10, I wanted to say a few words about the way our people have responded to this crisis. We've all had to learn to work in new ways over the last few months. All of you as well. Today's virtual results presentation is an example of that. And not everyone has found that easy. The way our teams across ITV moved to remote working and innovated to keep our shows in production and on-air has been remarkable. There was a true sense of mission and purpose in their desire to ensure that our viewers were kept informed about the unfolding crisis while also offering them an escape from it. Every single person at ITV wanted to help and support the mission to do whatever it took to inform, to entertain and reassure our viewers. Now I knew we employed some really creative people but their ingenuity and their inventiveness has been absolutely astonishing, whether that was people editing from their bedrooms with their curtains made into backdrops. Our news and daytime teams complied with the ever-challenging lockdown regulations while actually reporting on them, our internal comms team who have -- are really small team and have broadcast dozens and dozens of broadcasts and webinars to keep and inspire our own people so to keep our people informed. Our commercial team, who I'm so proud of, have been relentless in their pursuit of anything that's going, persuading even a car manufacturer to advertise in a period where showrooms were closed. Our sports team even ran a virtual grand national and that raised money, millions of pounds for NHS workers. And I could go on, every single bit of ITV has performed really well. But I will just say, we have done better both in revenue and restarting production than we ever thought at the start of this crisis and that is entirely because of the determination and sense of purpose of the people who work at ITV. Now over to you for questions.

Operator: [Operator instructions] First question comes from Joe Barnet-Lamb from Crédit Suisse.

Joseph Barnet-Lamb: There are three from me. Firstly, as you progress through both the pandemic and the unlocking. How are your thoughts evolving with regards to progression of studios into next year? Should we think normalized absolute studios revenues, normalized growth even on a lower base or potentially some capacity for catchup? That's question one. Question two, with regard to your improved advertising trends in July, some of the broadcasters in Europe seems to have seen unusually high auto spending over the summer, a period where they don't normally spend as a result of unlocking. Your July advertising numbers materially buoyed by autos? And then finally, you've disclosed intention to progressively roll out BritBox to 25 countries. I was wondering if you could give just a little bit more information around the cadence of that rollout and the costs associated to it. You did mention that it'd be funded out of BritBox US profit. So to confirm, should we assume no incremental cost over those BritBox US profit?

Chris Kennedy: So thanks, Joe. Let's start with the studios question. As you know, we're ramping up production now. See, it varies by production. As I said in my presentation, drama is really quite difficult with the 1-meter rule, but we can do it with exemptions. I think as we move into next year, it really is too early to say how that will develop. I think the one thing we know is that the market for content is going to carry on growing over the medium term. So that's a given. It really is a question of how budgets between OTT, FTA, U.S., U.K. regionally, they all develop and also on the ability to ramp up production.

Carolyn McCall: So it's our intention, obviously, to get the dramas, the 30%. So we're at 70% now, and that number is moving up. It's clearly our intention to get up to 100% production to back to where we were. And the 30% is dramas. As you've heard, we're getting dramas back, but there is a pipeline of those at the moment. So it is all about phasing. It is all about timing. And that's one of the reasons we can't give guidance. That's why we're not giving guidance really because it all depends on what we can get up and running. And we're already at scale in production. So when we were writing this a few weeks ago, we were not up at scale. So quite quickly, we've got up to 70% of our production is being delivered or being made. We've still got a bit to go to get back to where we were. So it's very difficult, I think, to look into next year, just at this moment in time. I think on the ad trends, it's worth saying that July is markedly better, as you can see August is markedly better than July. The categories, though, are really FMCG retail. So anyone who's got supply, who's open for business, they are the categories that are advertising. Interiors, for instance, DIY, that's all come back. Cars is interesting because they are back, but they're not back in full flight. And I think that's partly because of Europe has gone into lockdown differently and is coming out -- has come out much earlier of lockdown than we have. Do you want to add to that?

Chris Kennedy: Yes, Joe. And I think you're probably referring to the sort of the Spanish and French experience, which they had a much deeper dip in Q2, and they started earlier as Carolyn said, they were in March, and then they've come back more strongly. But as Carolyn said, cars are -- whilst they're better in July, it's not the main driver of the uptick.

Carolyn McCall: But it would be worth saying there's not one main driver. It's actually across board. Everyone's come back a bit. And the conversations we're having with autos are very positive. It's just that I think we've only just started manufacturing the cars, and I don't think they want to -- they don't want demand to exceed supply, put it that way. So I think there's a few months or weeks to go on cars. Your third question, Joe, I think, was on BritBox.

Chris Kennedy: The international rollout. Yes. So as you know, the priority for us at the moment is Australia, which we want to launch towards the end of this year. And then we are into -- as Carolyn said, we've looked market by market. We have made no commitments in any one market. We will -- we've effectively got two waves. We've got, as you'd expect, we've sort of teared them. So we've got -- the countries we'll look at first, which will be over the course of probably another year and then a second wave of those. So I can use that term in these times. So I think that's very much watched the space. We have to do the detailed market analysis because the reason we're doing it, as Carolyn said is, we want to improve the value of our -- the secondary exploitation of our content and BBC's content in each of those countries. So we need to be sure that we're creating value by doing it via the BritBox route.

Joseph Barnet-Lamb: That's great. Thank you very much. And then sorry, just finally on BritBox with regards to the investment associated with that. With regard you saying it being funded out of BritBox US profit, can you confirm that, that means there's no incremental cost over and above of any profits from BritBox U.S.?

Carolyn McCall: Yes.

Operator: The next question comes from Adrian de Saint Hilaire from Bank of America. Adrian, please go ahead.

Adrien de Saint Hilaire: First of all, I have a question on the potential impacts that the government has discussed on ads for junk foods, have you made any preliminary assessment on how much could be at risk? Secondly, Chris, you talked about the long-term outlook for content being unchanged. I don't think we have formally repeated your guidance for EBITA margin to be 14% to 16% in studios. So is that still the target? And how long do you think it will take to get back there? And lastly if that's possible, I was just wondering if you could just strip out to maybe the low volume headwind from your June and July advertising numbers because I'm sure the Love Island cancellation impacted the numbers? Thank you so much.

Carolyn McCall: Yes, it's a good point. On HFSS, we obviously -- well, firstly, the government has made it pretty clear that this is end 2022, '23. So that's the first thing. In our longer-range financial modeling, we have obviously taken it into account as a risk. So it is absorbed in our financial scenarios going forward. But actually, one of the key things to say is that we can't quantify it at the moment because we don't know what categories are going to be HFSS is a extremely broad category. It includes olive oil, which most people think is a very healthy product, and it is, but it includes it. So we need to be much clearer about the categories. We need to be much clearer about the food manufacturers response to this, in terms of how they will change products that they advertise. We need to be -- so there's just -- there's so many unknowns at the moment, which is why we're talking to government. We're in dialogue with government about this and how it will be implemented, which is why we can't quantify it. What we can do, of course, is prepare and plan and know what our mitigations are, et cetera, and that is included in our financial scenario planning.

Chris Kennedy: And it's also worth saying that the government has said that it will be -- it's probably likely to be 2023 before we see the detailed proposals.

Carolyn McCall: Yes. Margin studios target…

Chris Kennedy: Margin studio’s target. Yes, I mean, you saw in the first half, the studios margin was 10%. There are additional costs of production, under-COVID restrictions. So we'd see margins continuing to be suppressed for the rest of this year and definitely into 2021. Difficult to say by how much that will be because it does vary production by production. And it also depends on, as Carolyn said, the ingenuity and creativity of the production teams. I'm sure that those additional costs will come down over time.

Carolyn McCall: Your third question was, you make a good point about the Love Island headwind over the summer and excluding it from June and July. I wonder whether we should just come back to you on that because we don't intend to that because then you would know precisely what Love Island was. But we could come back to you and maybe give you a kind of feel for it.

Chris Kennedy: But yes, certainly, it was a headwind for us in the July number we've reported.

Operator: The next question comes from Annick Maas from Exane BNP Paribas.

Annick Maas: So, my first question is again on studios. So just thinking about the midterm growth of studios, really, with the pressure on TV broadcasters across the world and that's implicitly having an impact on the studios. I just wondered, do you think beyond next year, actually, the 5% CAGR would be sustainable for studios or not? And my second one is just on the July advertising number you suggested. I assume some of the budgets that have come through in July had been postponed from Q2. So, is there really some budgets that have been new money in a way? Or is it all rescheduled budgets that you've seen so far? Then on BritBox, just for the U.K. bid, would you maybe be in a position to share a bit more KPI, such as churn, for instance? And my last one, just on the overhead cost savings, the ones that are recurring. Could you maybe give us an indication of how you expect those to be split over the next year?

Carolyn McCall: I think, look, are we have said that we believe that the global content market is definitely a growth market. We can't see why that would change. In fact, we think that probably has improved because of COVID because there's such a backlog of people wanting content to fill their screens. So, our estimation has been the global market would be 3% to 5% growth over the next three to five years so over the medium to long term. So I'm not going to go into a CAGR for studios because we're not giving guidance, but I would just talk about the global market, and then you can take -- you can extrapolate from that. And we believe in studios, it's a very strong business. It's shown how quickly it can actually come back to production at scale from a standing start. And I think we will continue to invest in it with talent deals and continue to grow it. So I'll just leave it at that because I think you can see what I'm indicating. On July and the advertising deferments. Some would be deferred but actually a lot of people deferred into second half, actually, rather than into Q2, to be actually honest with you. So -- and I know July just falls into the second half but many of them deferred into the autumn because they actually thought that was a safer thing to do. So we haven't broken down exactly, I mean, Kelly will have that number, but we haven't broken down exactly that proportionality. But I would say the majority that came in, in July has been advertisers in July rather than deferments. On the KPIs for BritBox, we have given as much as we can in terms of subscription trends free trial conversions and so on. What we've said is that until we have our content distributed across all the platforms that we can have. At the moment, it's up to 60%. We haven't had an original drama yet. That's coming in the second half the spitting image. I think until we have a kind of steady-state for BritBox UK, where we can actually compare like with like and make some meaningful KPIs we won't disclose those. But we will do that as soon as we believe we have a steady state for BritBox UK.

Chris Kennedy: And then on the permanent cost savings, as we said, we -- around £10 million of the £60 million savings this year are permanent. And then we've said it will be £25 million to £30 million of additional savings over the '21 and '22. We haven't split between those 2 years. But we are looking at this as a multiyear project.

Carolyn McCall: And actually, what we're doing, as all companies I'm sure are doing, is we're looking much more deeply at how we work going forward and where there could be much more permanent savings as a result of changing how we do things and how we work.

Operator: The next question comes from Patrick Wellington from Morgan Stanley.

Patrick Wellington: Three questions. Firstly, when you look at advertising, you're talking about an improving trajectory. Do you see a marked step-up in improvement in Q4 over Q3? I mean, July and August are both down about 20, September is a big month. So it's really going to be Q4 if we're going to step-up. And when you do your projections forward, what's the first quarter where you think you'll revert to advertising growth, the easy comp is obviously Q2 2021, do you think you might get back into advertising growth before that? The second question is about the PSB review, what do you expect to happen in that? And is there any connection with the junk food issue and potentially a change in your way of selling, moving off station average price, for instance, and wood moving off station average price be regarded by you as a positive or a negative? And then thirdly, you talked about going back to a more normal schedule cost in 2021. But could you define a more normal schedule cost? Because obviously, you're going to have a bit of bunching of sports costs because of euros and presumably a bit drama coming back on in Love Island and so on. So perhaps you could put that in the context of the sort of I don't know, £1.50 billion, which I would consider to be the sort of normal scheduled costs?

Carolyn McCall: Look, I think with advertising, I mean, there's no question. As I said, we've seen a significant improvement in August over July. But we would have given you August, but it's only the first week of August, so it's too early. And what is happening in the market at the moment for obvious reasons is there are a lot of late bookings. Much, much more late bookings than there's ever been before. And so the visibility forward is not good. I mean clearly, we have hoped that this is a continuing trend and that Q4 will obviously be better than Q3, we hope that. But we're not giving guidance precisely because we can't say definitively what is going to happen because I think advertisers are just like you and me, they don't know whether there's going to other clouds on the horizon in terms of second wave. I mean you can't open a newspaper or listen to the radio what telly without someone talking about a second wave at the moment. So people are, obviously, a bit more cautious than they might be. So it's difficult, Patrick, to tell you the Q4 versus Q3 because we don't even know where we will go. On Q3 other than that the trends are definitely positive for advertising. And actually, as importantly, anecdotally, and I've sat in on some of these meetings, the whole tone and kind of conversation with advertisers is positive about the autumn. They're already planning Christmas campaigns, they're already talking about how they do good over that period in terms of their campaign. So their social purpose being blended into their thinking, their creative thinking on that. And they're doing that now. And I think that is a whole world away from conversations we were having in April and May, which were much more tactical and topical, I suppose.

Chris Kennedy: And I think also in advertising, I think what we've seen through COVID, and we'll see through the upward trajectory, as we say, is the benefit of having invested in that -- in the creative partnerships team, in having a much more active dialogue with brands. As Carolyn said in the presentation, the commercial team have talked to over 3,000 people during lockdown. And that is as a result of having built those teams up over the last 18 months, and I think we're still starting to really see the benefit now.

Carolyn McCall: On the PSB review question, Patrick, I think that's what we -- I would say is that we've made as an industry of PSB's strong progress with Ofcom and DCMS actually on particularly the issue of prominence, I think they really understand that if you are not included on platforms, you can't have prominence. And if you don't have prominence, then people can't find PSB content. So never mind the 16 to 34s, but actually it will become increasingly difficult in an online world for anyone to find anything other than Netflix and Amazon and Disney+. So I think they've really got that point, and I think that they are aware of the implications of that to PSB. So let's wait and see what the review comes up with the Ofcom review, which we're anticipating at the end of this year. But I think that's what we are hoping for that. Actually, the principles of prominence and inclusion that you have in the linear world are taken into the online world and that there is a level playing field in addition to that, amongst the online platforms and so that we are able to get fair value for our content. I think on the other questions you asked, I think what HFSS will do, I don't think there's not a direct connection between the PSB review and HFSS. I think what it does do though is it brings into sharp focus the position of a commercial PSB and what its obligations are. So there are big obligations on you being a PSB that if you're not a PSB, you don't have to do. And I think the compact, the modernization of that 2003 Communications Act is going to be imperative to ensure that the compacts going forward for commercial PSBs reflects the value of being a PSB, if that makes sense. On CRO, clearly, I think, yes, HFSS also brings that into short focus so I think that it could be an opportunity. We've done a huge amount of work on it already, as you'd expect. And we will go forward and see how that goes. It's too early to say, I think on that.

Chris Kennedy: And schedule cost. I mean we guided at the beginning of the year, 1.1 billion for this year. So that's what I would sort of regard as a normal number. And you're right, I mean there will be drama being delivered next year that we would have otherwise been delivered this year, and we've got certainly the move of the euros into next year to accommodate. But Kevin and team have done, again, as you'd expect, they've done an awful lot of planning there, and they think they can absorb those within that budget.

Operator: The next question comes from Julien Roch from Barclays.

Julien Roch: My first question is on Planet V. Will you be subject to the usual tech tax, which has come down from 60% to 40% according to the latest research from ISDA and PWC, media owners only get 60% of the money invested by advertisers. So will that be the same on Planet V, we'll pay for all the cost, DSP, DNP, SSP, all of that. So basically, will Planet V, because it's gone programmatic, have an impact on new revenue? So that's my first question. On the second question, if you look at, for instance, the BARB that -- which they publish every Monday on what people watch during the lockdown. Consumption of TV went up dramatically, same for SVOD but since then consumption of TV has come down back to previous level, why consumption of SVOD has stayed up? So I don't know whether you can give us you your view on that? And the last question is coming back on CRR. I know you kind of answer on Patrick's question that you've -- it was also in focus, and you've done a lot of work on April, it was too early to say. But how actively are you lobbying the government? Is that a priority for you because unless you change the way you sell advertising, create and sell inventory, I don't see how you can have meaningful targeted advertising and linear -- or at least on linear. These are my three question.

Chris Kennedy: So, on Planet V, I think you said tech tax. I think you're talking about just the sort of -- all the research that's been done online where less than $0.50 on the dollar gets back to the publisher. I mean that's the whole point about doing Planet V is it's our platform. It is a soup to nuts, it is from the demand side all the way to the supply the and the ad insertion. So that's why we're doing it. So the money will go from the advertiser to ITV and to anyone else who puts their inventory on Planet V.

Carolyn McCall: And it's premium inventory.

Chris Kennedy: Yes, and it's a different product. It's a premium VOD inventory. So I hope that answers -- I hope I understood the question correctly. Second one was on the BARB --. Does that answer you, Julien?

Julien Roch: Yes. So you're not going to pay any DSP?

Chris Kennedy: No. We have a -- We got a perpetual exclusive license in the U.K. on the tech. So -- and that's the very reason we did it. So we control that value chain and our own destiny within it.

Carolyn McCall: And on the BARB data, I mean, you're right that those highs of viewing have come down, but they've not gone back to where they were. So I think people have discovered content that they like, there have been habits formed over COVID and I mean I heard Reed Hastings on his call actually saying that they don't expect to keep all the subscriptions they got through COVID. So I think it's the same across the board, which is you've seen a rising tide, it floated everybody up. But actually, that will come down as people are returning to work because they just don't have as much time to view, to be honest. So I think our main thing is we focus on the 16 to 34s that we have attracted. For instance, 2.1 million, 16 to 34s, were watching ITV News at 6 o'clock, and that's fantastic. And they liked it because informative but accurate and trusted. It was not fake news, it was not in misinformation, and that's very valuable. And now that we've got even more 16 to 34s registered on Hub. What we have to make sure we do, I think, is make sure we're doing relevant content for them to keep them coming back to ITV. And we have some plans in that area. And I think when we do the full year results, we'll have more to talk to you, I think, about what we're doing specifically to engage and retain 16 to 34s into ITV.

Chris Kennedy: And then I think the third was CRR and is it a lobbying priority. And I think, as Carolyn said, really, the priority is PSB right now.

Carolyn McCall: Yes. PSB review. I mean, I think the thing to make sure is understood is that actually CRR is a CMA decision. It's not actually government. I mean government DCMS will have a view, obviously, but it's a CMA decision because it was set up for competition reasons, not for any other reason. So yes. Just so you know that, Julien.

Julien Roch: No, I knew that. But I was wondering whether you were intimately lobbying the CMA to get CR removed.

Carolyn McCall: Not at the moment. As Chris said, I think PSB is our key focus at the moment, and we have a lot of work done on CRR, as you'd expect, but it's not something we are pushing currently.

Operator: The next question comes from Lisa Yang from Goldman Sachs.

Lisa Yang: I have three questions if possible. The first question is on advertising. I'm just wondering if you can comment on your advertising share going to H2. It looks like in Q2 based on the Nielsen number that you lost a bit of share, which potentially is due to Love Island and it's a lack of sports. Just wondering to what extent that could maybe reverse into H2? And can I just follow-up as well on your August comment, I mean you said it's significantly better based on the data you have so far in the first week. And I know you don't -- you wouldn't want to comment on weekly data. But given how the market is nervous about broadcasters in general, I'm just wondering if you can confirm whether first week of August is close to flat? That's the first question. The second question is on cost. I think you reiterated your overhead cost savings of £60 million for the year, which implies basically only had been for the second half. So I'm just wondering why wouldn't you to be able to do more in the second half, especially given though the additional costs you might have on studios or the investments you're making elsewhere as well. Any comments on that would be helpful. And the third question is on the ban on junk food advertising. I know there's a very limited visibility again on this. But you talked about having taken that into accounting or financial scenario planning. So I'm just wondering, if you think about a range of like advertising impact on the revenue, how should we think about the drop-through? How are you thinking about potentially mitigating that impacts on your EBITDA? Like should we expect a 100% drop through or should you be able to be maybe offset half of that?

Chris Kennedy: I think we'll have to come back to you on the third because I wasn't quite sure.

Carolyn McCall: It's quite hard to hear you, I'm afraid. So we'll need to clarify a couple of those questions. But do you want to start with, what was the question on advertising?

Chris Kennedy: Yes. I mean ad revenue. Just I think Nielsen data is showing that we've got a slight weakening of share of advertising in...

Carolyn McCall: That's Love Island in Europe.

Chris Kennedy: And Premier League coming back as well.

Carolyn McCall: Yes. Yes.

Chris Kennedy: So that's, that. I mean, as you saw, our share of commercial impact is up in the half.

Carolyn McCall: Yes. And we can't tell you August otherwise we would. I mean if we were able to say. I mean the reason we're not doing that is we just want to wait and be absolutely sure. I've said it's a marked improvement on July, which is extremely good. But I think we're not giving guidance right now for August, but when we can, we will.

Chris Kennedy: And then on the cost savings, yes, we've delivered £51 million of the £60 million so far. I mean, clearly, that includes the hardest headquarter when there was no travel and no discretionary spend whatsoever. So you wouldn't expect the same saving in the second half. But I think the thing I'd say on cost is we issue guidance, we set targets, but we will take cost out wherever we can, where it makes sense. And so that we can continue to invest in the strategy for the medium-term and create value. So we wouldn't get to 16 stock. We would carry on.

Carolyn McCall: Financial scenario planning. Do you want to repeat the third question, please, because I think neither of us really heard it?

Chris Kennedy: Yes. No. It wasn't clear.

Lisa Yang: Yes. No worries, and I'm sorry about the bad line. Yes. I was just wondering, as you think about the potential [audio gap] the junk food advertising ban. How are you thinking about mitigating that potential impact? Should we assume 100% drop-through to your EBITDA? If you were to lose that advertising money or you feel like you have enough time to potentially adjust your cost table to other things to reduce that impact. And a quick follow-up on the first question, I was also wondering if you can comment on your thoughts about the evolution of your share in the second half?

Chris Kennedy: So Lisa, I think I'll just go back to the -- it's really uncertain on the ad front. So we can't give you any guidance on our share of advertising.

Carolyn McCall: Yes. On HFSS, we don't have the information yet. I mean you all keep calling it junk advertising. That's come up four or five times. HFSS as a category is a very, very broad category of things that PHE, Public Health England would list. And we don't yet know which products they're including and which are not included. And therefore, we cannot quantify it otherwise we would have told you what that was. So until we know, we can't do that. Clearly, as I said earlier, we are -- we have already forecast some of this and we have already got it in our financial scenarios going forward. So it's not like we are preparing our financial scenarios with this in mind. But we do have to get -- there are so many unknowns just now that we can't really be clear about it.

Operator: The next question comes from [indiscernible] from Alliance Bernstein.

Unidentified Analyst: The first one on working capital. You had a very large inflow in H1. I know you gave cash conversion guidance for H2. But could you just say specifically how much of that inflow will unwind in H2? And second one on ITV Hub, the viewing growth there seems to have been well below that for nonbroadcaster as for YouTube in Q2. Are you happy with the audience development for ITV Hub?

Chris Kennedy: On working capital, we've given the guidance, which is that cash conversion for the full year will be 75%. So you can see that pretty much all of that working capital inflow will go out in the second half.

Carolyn McCall: On Hub, I would say that if YouTube is growing faster, that's just what has always been the case, and that tends to be very young people going to YouTube. So it's under 35s going to YouTube. And that has been the case. And that's why I made the point about 16 to 34s. I mean we've been focusing on that. We've been thinking about that. We are going to take -- we're going to do more to make sure that we think a bit differently about what content we do and how we attract, retain and engage that audience, but that's not surprising to us that Hub is doing well. It has put on a lot of hours, dwell time is up, registered users are up, all the metrics are going in the right direction for Hub. And it is an improving experience all the time. And I think the content window being extended is going to help it quite a lot. Because at the moment, there isn't as much on it. I mean if you compare YouTube to Hub, I mean the wealth of content of YouTube of tiny little snippets of things that people just go in and out of, that's what they do. So it's not comparing like with like, really. So no, we're not disappointed that usually this has gone disproportionately. A lot of kids have been at home.

Chris Kennedy: And with the Hub viewing, particularly in this Q2, it is impacted by Love Island.

Carolyn McCall: And euros. I mean euros was 10x...

Chris Kennedy: And Euros would have been -- yes.

Operator: The next question comes from Richard Eary from UBS.

Richard Eary: A couple of questions, please. Just first 1 is on studios. Obviously, we've got production coming back on stream. Drama is obviously being more lags. But when we look at Q3 in terms of growth rates, is Q3, do you think going to be the worst quarter in the year or should Q2 be the worst in terms of overall growth? And to be clear on that external sales rather than internal sales. That's the first question. The second question in terms of production costs, higher production costs within COVID, I think everyone understands that. Is there any reason why that you can't pass any of those costs on to basically buyers within contracts and whether that's something that you can do, given, obviously, demand for end content, as you talked about earlier on the call? And then just the last question, in terms of the broadcast business, there was actually decent momentum in terms of growth rates, all those small numbers on the D2C side and the other revenue numbers. Is there any reason why those growth rates shouldn't continue in the second half of the year and whether there's any sort of one-off issues in there, particularly in the other revenue number?

Carolyn McCall: I'll just, do production costs and buyers, and then Chris can do the growth rate and the growth rate of both studios and D2C. I think you're absolutely right. We've never said that it will just be us absorbing production costs. I mean, I think everyone in the industry understands that COVID is going to increase production costs. And it will depend on the production and on the relationship and the negotiations. So in most cases, it will be shared. But I suppose, overall, production costs are going up because of COVID. That's the point. It doesn't mean that we will absorb the costs at all.

Richard Eary: Carolyn, just to be clear, then there's no reason why margins shouldn't come back?

Carolyn McCall: Look, our ambition is completely our aim and ambition is for margins to come back in studios as quickly as we can get them back. And we will do everything we can to make sure we get those margins back. They are actually good margins, they're the highest actually in the industry in terms of that range, and we intend to do that.

Chris Kennedy: And then I think on the performance in Q2 versus Q3, it's a really good question. And it's very much depends on how quickly production ramps up. It's a very, very fast-moving environment. I think Carolyn said earlier, just 4 weeks ago, the idea that we'd have 70% of our productions up and running, we'd have been very, very happy, and we are happy. So because what you've got is the dynamic in Q2, we were able to deliver quite a lot of productions that had moved into post production, particularly in the U.S. So there was sort of a bow wave of revenue that came into Q2. So I think Q3, it just will depend on how quickly we can finish the shows that are close to being able to be finished and deliver them in Q3. So I can't really answer that question right now. Q3 will still be a very sort of perturb quarter for studios if I could put it like that. And then on the D2C growth, there are quite a number of moving parts. So in terms of year-on-year, clearly, we don't have the pay-per-view this year. I mean, had we without that comparative, we'd have seen double-digit growth in the first half. But then again, interactive was probably elevated because of the data I'm viewing and now we'd hope that we'll hang on to a lot of that engagement. But I think our central assumption is that will come down a little bit. But D2C, the growth rates remain very good for us. And we've got that number of initiatives in a good momentum.

Carolyn McCall: Yes. It's good momentum, yes.

Chris Kennedy: And then the other piece in there is just the life tools and how quickly we may be able to get those up and running. But we're not thinking that will happen this year.

Richard Eary: Chris, just a follow-up on the other revenue number. What was in there, the growth number?

Chris Kennedy: It was actually across the piece. So within that, you've got Pay TV, you've got SDN and you've got BritBox, and it was across all of those categories.

Operator: The next question comes from Sarah Simon from Berenberg. Sarah go ahead.

Sarah Simon: Yes. Good morning. I've got the obligatory three as well, please. First one was, can you just COVID, sort of give us a bit more insight into what you're classifying as exceptional COVID costs because we're seeing quite different treatments by the different broadcasters in terms of what they're accounting is exceptional? Second one was, can you just give us an idea of the percentage of revenue of the external studios revenue that was coming from DTC in H1? And Carolyn, you mentioned the Hub extension in terms of the window. Can you talk about how you manage that against BritBox wanting to have as much content as possible? Because obviously, there's a bit of a conflict between boosting Hub and starving BritBox, if you like? Thanks.

Chris Kennedy: On COVID exception, I'll start with that one. We've been very disciplined on that. The only cost in there are the sports rights impairment that is directly related to the move in the schedules. And also the one-off costs of closing down the studios production in Q2 and then reopening them in Q2 and Q3. So for instance, that does not -- so the exceptional would not include the incremental cost of production of working within COVID restrictions, it's purely the shutdown and the restart costs so the sort of the costs that we've incurred twice.

Carolyn McCall: And you asked -- I think your second question, Sarah, was it the percentage external studios revenue that is OTT in the first half? Is that what you...

Sarah Simon: Yes, correct. So what you're getting from the Netflix and the Amazon?

Carolyn McCall: The OTTs, yes. So we don't break that down, to be honest with you. So I won't give that to you for the first half. But I would just say to you that, overall, the best way to look at it is to say that a third comes from OTTs of overall external revenues studios, a third comes from FDAs and a third comes from ITV network, roughly. Just roughly, that's kind of a good way of looking at external revenues for studios. On the Hub and the extension to Hub, currently -- well, in the past, it's been one month. And the feeling is that one month is just not long enough as a window to really build Hub into a destination, and it needs to be more than a catch-up service and a simulcast service. At the moment, it does catch-up in simulcast very, very well. But it is not somewhere where we want to encourage people stay and browse and increase their dwell time and find other things that they want to watch in Hub. That's important to the VOD business. So extending the window is a way of doing that. But it's done in a very balanced way with BritBox. So the team -- the teams talk all the time, as you would expect. The key thing for BritBox is that it is the A to Z of multi-series boxsets for British talent and for British content. And that's what it is. And that's from us, from the BBC, from Channel 4, Channel 5, so all British content you can find in one place whenever you want it. That's its distinctiveness. It's not so much about recency of programs. And then, of course, the originals that are coming through for BritBox, which Hub doesn't have is all about freshness and attracting new people to evaluate BritBox. So you're drawing them in. But once they're in, actually, we find that about 70%, 80% of people are not watching the new. They're watching older content that is already there. So for instance at the moment on BritBox. People through COVID have been looking at kind of comfort shows. They've been looking at Vera. They've been looking at all the BBC shows that Gavin and Stacy. They've just been going back to things that are familiar, but they've not seen all of and they're watching them from the beginning. So it's a very different business to Hub. And we're learning more and more about that every day. And so we're evolving it and trialing and testing it as we go along. So at the moment, it's -- extending the window is fine. But we will keep that, we will watch that. If it's going to be overly damaging, we will stop it.

Operator: Our final question comes from Nizla Naizer from Deutsche Bank.

Nizla Naizer: I have two remaining questions from my end. The first is on BritBox. I know you can't mention too much about the KPIs, but given how important the 16 to 34-year-old age group seems to be, could you tell us perhaps based on subscribers that you have seen, is it leaning towards that age group? Or is it more diversified? Some color on the demographics would be great. And secondly, when you mentioned the original content or the new content that you want to put on BritBox, who is that targeting? Is it targeting that younger age group? And is that a strategy that you want to pursue? Lastly, on risk BritBox, if you think of 2021, what sort of incremental investments would you need to make into the service? You quantify the 2020 number? Could you give us some color on 2021? And my last question is on ITV studios. Given detection, I guess, with the OTT platforms have seen on the back of COVID-19, have you seen more commissions coming your way from these platforms, which could make 2021 more interesting for ITV studios. Some color on how incremental demand has -- the conversations that you are having at least this year would be great.

Carolyn McCall: So, on BritBox, I think from a demographic point of view, it is actually quite broad and diversified. So the 16 to 34s, I mean, in a subscription business, you don't really mind where your subscriptions are coming from, it's not like Telly. And what has been encouraging is it's actually been quite diversified. So there are people in there, 25, 30, 35-year-old age range as well as all the other demographics that you'd expect. It is tilting slightly. If there was, it started actually being more male and young male. And I think that's because we did quite a lot on Dr. Who. We did an event, a big event on Dr. Who, which was very, very popular. It launched in November, and we did the Dr. Who event in December. But actually, what's happened over time is it skewed slightly more to mid-aged female. But actually, that's just small spike compared to the fact that it's quite broadly diversified. I think in terms of the new content, there's a range of different content, as you've heard, and we will overemphasized to certain target audiences, different types of content. So crime with Irvine Welsh, Irvine Welsh has an incredibly -- yes, I mean, everyone reads Irvine Welsh. But it's quite young in terms of people who would know who he was and really like his stuff. So that might be something that we target to 16 to 34s more than we would do to anybody else. Spitting image, I think we're going to be introducing it as satire to a whole generation, which have -- who won't have seen it. So we will have to do something more for 16 to 34s of spitting image because we think they'll really, really like it, but they need to be introduced to that SSR. So it just varies, I think, on the program that we've got or the series we've got to get to in terms of our communication message. Chris, do you want to...

Chris Kennedy: Yes. I mean, we haven't given guidance for 2021 on BritBox yet, but we'll continue to be investment phase for it clearly for a number of years.

Carolyn McCall: And I think your third question was about OTT commissions. And I think we did -- yes, definitely. We've had a lot of success with OTTs. I think I already kind of summarized quite a lot of programs like Queer Eye and the stuff we're doing for Quibi. So we're doing quite a lot for Netflix. We did our first scripted show in fact out of the U.K. for Netflix recently. Amazon, we've got Love Island in France on Amazon. So yes, no, we are definitely being commissioned more. And I think I said, one of our priorities is to continue to expand doing business with OTTs worldwide out of studios. Great. Okay. Was that the last question, piper. Okay. Listen, thank you all very much for joining us virtually. And have a good day. Thank you.

Operator: This concludes today's call, ladies and gentlemen. Thank you for joining us. You may now disconnect.