Broadcaster ITV has revealed falling annual profits and warned over tumbling advertising revenues as wider economic woes impact marketing spend.

The group behind hit shows Love Island and I’m A Celebrity… Get Me Out Of Here! reported underlying pre-tax profits of £672 million for 2022, down from £774 million in 2021, as total advertising revenues fell 1% and it spent heavily on content and its ITVX online hub.

ITV cautioned over a “challenging” ad spend outlook amid economic uncertainty in the UK, predicting ad sales to plunge by around 11% year-on-year in the first quarter – falling by as much as 16% in March – and to remain down by between 10% and 15% in April.

We continue to look carefully at further mitigation measures to offset the impact of high levels of inflation on our cost base

Chief executive Dame Carolyn McCall said: “The short-term outlook is challenging, with total advertising revenue expected to be down around 11% in the first quarter, but we remain very focused on successfully executing the strategy and enter 2023 with strong momentum.”

She said advertisers are expecting the second half of 2023 to be “easier than the first half, but that remains to be seen”.

The figures come as ITV and fellow broadcaster Sky have been asked by media watchdog Ofcom “to explain their actions” in their coverage of the Nicola Bulley case after her family questioned the role of the media during the investigation.

Dame Carolyn said ITV was a “responsible broadcaster and we take it very seriously”.

ITV shares fell 3% on Thursday morning following the results.

ITV said it will “continue to manage our costs tightly” and is set to deliver £15 million of savings in 2023 as part of a previously announced £50 million target by 2026, which comes on top of the £106 million of cuts between 2018 and 2022.

It delivered £23 million of permanent savings in 2022, ahead of a £17 million initial goal, but is facing a £40 million hike in costs over 2023, having increased staff pay by 5% and due to soaring energy bills.

“We continue to look carefully at further mitigation measures to offset the impact of high levels of inflation on our cost base,” ITV added.

The group said heavy investment in its production arm and a digital push is paying off, with ITV Studios underlying earnings up 22% at £259 million on revenues up 19%.

And while ad revenues in the media and entertainment business were 1% lower at £2.2 billion after a record 2021 result, it said this was still the second highest advertising revenue in ITV’s history, with digital ad sales jumping 18% to £411 million.

Total group revenues rose 8% to £3.7 billion in 2022, it said.

It expects digital ad revenues to jump by around 25% in the first three months of 2023, though this is not set to offset the wider slump in ad spend.

ITV confirmed that profits will be weighed on again over the year ahead as it spends another £55 million on its new ITVX content site, although it hopes this will start to bolster the bottom line after 2023.