ITV Shares See Seven Week Low As Investors Lose Faith

ITV saw its share price slip to a seven-week low yesterday, as the mounting pressure from declining viewing share and analyst pessimism drove investors away from the company.

Closing at 115½p, ITV’s price will be further impacted by Citigroup, a leading stockbroker, downgrading the broadcaster to its Sell roster.

Citigroup’s decision is due mainly to ITV’s declining share of viewing amongst terrestrial channels. The broadcaster’s flagship station, ITV1, currently commands a share of 19.99%, and while this is ahead of rivals Channel 4, Five and BBC Two, the broadcaster is topped by BBC One at 23.4%.

ITV1’s share has shed 1.9% points from its total in the last year alone, and while BBC One’s share has also decreased, falling by 2.69% points in the same period, in ten year analysis ITV has slipped by 18% points, compared to BBC One’s 7% points.

Investors have also been discouraged by the failure of a takeover bid for ITV from Time Warner, Goldman Sachs and Apax Partners. The bid was first mooted in July, with speculation amongst city traders sending ITV’s share price skyward (see ITV Bid Speculation Pushes Share Price Skyward).

However, Citigroup has remained sceptical, suggesting that advertising revenues are likely to see “negative trend growth” following increased competition from online and below-the-line media.

Speaking to today’s Times newspaper, City analyst Marc Sugarman stated that ITV should be able to save around £50 million over the next five years, and while advertising revenues may decline there is scope for profit growth across the broadcaster’s portfolio of digital channels.

Citigroup’s target share price for ITV now stands at 105p, down from 130p which was in place during the company’s previous inclusion on Citigroup’s Hold roster.

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