Investec releases ‘sell’ rating on ITV

Investec predicts a tough summer for ITV with negative ad revenue forecasts for July and August.

“While new management is transforming a previously complacent and inward looking business from the bottom up, our mid-term negative view on free-to-air broadcast remain,” the financial firm said.

“Transformation plans are still subject to execution risk as mid-term competitive pressures from other digital distribution channels continue.”

Yesterday, ITV confirmed it bought in £275 million nominal debt. ITV expects to make £9 million interest saving this year and £18 million on-going saving.

Investec claims the “buy back of expensive debt looks sensible given gross cash balances as long as the required premium is not too high in cash terms”.

The bank forecasts a positive +14% rise in TV ad revenues in June following the Euro 2012 tournament but expects negative TV ad revenues in the summer – with July and August down -8% and -3% respectively.