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ITV cautious on advertising outlook

The group anticipates a single-digit decline for advertising in the first four months of 2019
February 27, 2019

ITV’s (ITV) non-advertising revenues rose by 5 per cent to £1.97bn for the year to December 2018, with sales for ITV Studios up 6 per cent to £1.67bn. However, the media group’s shares were marked down on results day. Political and economic uncertainty continues to weigh on advertising demand; while advertising sales edged ahead by 1 per cent over the reporting period, they are expected to reduce by 3-4 per cent in the first four months of 2019. First-half performance will be held in check by planned investments and deliveries being weighted to the second half, while relative metrics are likely to pale when set against tough comparators set during the FIFA World Cup in the second half of 2018.

IC TIP: Hold at 124p

Indeed, on the investment front, ITV confirmed its proposal with the BBC to bring subscription-video-on-demand service ‘BritBox’ to the UK. The US version already has over 0.5m subscribers. ITV expects BritBox investment of £25m in 2019, and £40m in 2020. This adds to pre-disclosed “essential investment” of around £40m in 2019, rising to £60m by 2021 – mitigated partly by £15m of cost savings in 2019, increasing to a £35m-40m run-rate by 2021.

According to Bloomberg consensus forecasts, analysts expect adjusted EPS of 14.1p against 15.4p in 2018.

ITV (ITV)    
ORD PRICE:124pMARKET VALUE:£ 4.99bn
TOUCH:123.95-124.05p12-MONTH HIGH:183pLOW: 122p
DIVIDEND YIELD:6.5%PE RATIO:11
NET ASSET VALUE:20p*NET DEBT:109%
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20142.5960511.64.7
20152.9764112.46.0
20163.0655311.27.2
2017 (restated)3.1350010.27.8
20183.2156711.78.0
% change+3+13+15+3
Ex-div:11 Apr   
Payment:23 May   
*Includes intangible assets of £1.61bn or 40p a share