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ITV moves fast to stand still

The decline in advertising revenues wasn't as bad as bosses had forecast
July 24, 2019

Shares in ITV (ITV) were marked up on results day as the structural decline in terrestrial advertising revenues was not as severe as bosses had feared. Media companies are in a state of flux as they seek to tailor revenue streams in the face of digital market disruptors. An illuminating contrast is provided between a 5 per cent decline in total advertising revenue over the first half, set against an 18 per cent rise in online revenue, achieved despite “tough comparatives”.

IC TIP: Hold at 113p

Patterns of media consumption are evolving and the imperative to keep pace is intensifying. Days before the release of its half-year figures, ITV announced an agreement with the BBC to launch a streaming service across multiple screens and devices during the fourth quarter. A mixture of dedicated and regurgitated content, BritBox will cost £5.99 a month, less than the likes of Netflix (US:NFLX), though unlike the FAANG it has a limited budget, so the level of programme commissioning is likely to pale by comparison.

Subscribers, however, will be able to catch ITV’s Love Island. It may be hard to believe for some, but the show – currently in its fifth series – was one of the main reasons why ITV viewing figures held up reasonably well, particularly given that 2018 was the year of the men's World Cup. An average of 5.5m people tuned in to the show, most of whom fell within the key 16-34-year age demographic. 

Bloomberg consensus gives cash profits of £719m and adjusted EPS of 12.8p for the full year, rising to £730m and 13.2p in 2020.

ITV (ITV)    
ORD PRICE:113pMARKET VALUE:£4.55bn
TOUCH:112.95-113.1p12-MONTH HIGH:175pLOW: 103p
DIVIDEND YIELD:7.1%PE RATIO:10
NET ASSET VALUE:17.3p*NET DEBT:150%
Half-year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20181.592655.32.6
20191.482224.82.6
% change-7-16-9-
Ex-div:24 Oct   
Payment:02 Dec   
*Includes intangible assets of £1.62bn, or 40p a share