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The price is right: ITV’s valuation case

After a bruising few years, the media group now looks cheaper than the sum of its parts
November 24, 2022

“I’m an ITV Shareholder… Get Me Out of Here!” quipped one below-the-line commenter in a recent Financial Times article on ITV’s (ITV) third-quarter results. You can see where they are coming from. The entertainment company had just reported a 14 per cent drop in advertising sales, flat viewing figures, and a growing inflation problem.

Tip style
Value
Risk rating
High
Timescale
Long Term
Bull points
  • Strong production business
  • Lowly valuation 
  • New streaming service
Bear points
  • Languishing ad sales
  • Slow to modernise
  • Powerful TV rivals 

The trading update is the latest twist in an underwhelming plot. Even before Covid-19 hit, ITV’s advertising revenue had begun to stagnate and the media and entertainment division was struggling to grow its profits. Meanwhile, the broadcaster’s reach – defined as the proportion of people aged four and above who watched at least 15 minutes of ITV a week – had fallen from 60 per cent in 2016 to 48 per cent in 2021, with younger viewers proving particularly elusive. 

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