BoAML: ITV modest upgrade but cautious outlook

ITV Family net advertising revenues (NAR) grew 1% in Q3 and marginally ahead of BoAML forecast.

However, ITV expects NAR to fall 2% in Q4, in line with market expectations with December growth guidance of -10% although November saw a 3% increase buoyed by the Rugby World Cup and the X Factor.

“ITV’s estimate for December could well be conservative given the lack of visibility but is also likely to reflect a tough comparison given VAT related spend last year and potentially a deterioration in the underlying trend given macro weakness,” BoAML said.

BoAML economists now expect negative GDP growth in the first half of 2012 and not surprisingly ITV remains cautious on the outlook for 2012 despite Euro 2012 and the Olympics.

Overall Group revenues for ITV grew 4% to £1,515m for the first 9 months driven by 9% growth in ITV studios which include productions such as I’m a Celebrity Get Me Out of Here and Come Dine with Me.

BoAML concludes with an underperform rating for ITV given the macro concerns, risks around the transformation plan, pension deficit, structural pressure from media deflation and loss of advertising share to new media and the growth of pay TV.