No doubt that huge challenges await the new CEO & the solutions to some of them seem fairly finite as more TV channels spring up & younger generations increasingly switch to the internet to consume alternative media. One likely consequence: future ad revenues will come under increasing pressure.
That's partly what the market is also telling us. FTSE making new highs, but this dropping back again. In context, not that encouraging for any great upside here anytime soon.
I still hold real shares at 174.75. No rush with that, but my target remains previous resistance at circa 180+ & with the previous divi taken, rightly or wrongly, I'll probably move on. - GLA.
Former easyJet boss takes on ITV amid troubling Virgin dispute
Dame Carolyn McCall will take the helm at ITV on Monday with the broadcaster locked in a commercial dispute with its biggest shareholder and playing catch-up in televisions internet revolution.
The former easyJet boss will take over day-to-day operational responsibilities from chairman Sir Peter Bazalgette and chief financial officer Ian Griffiths, who have been acting as caretakers, at a crucial time. Last year ITV issued an £80m bill to Virgin Media for its main channel, along with a blackout threat. The cable operator, owned by ITVs biggest shareholder Liberty Global, has so far refused to pay up, and either pulling the plug or negotiating a deal will be among Dame Carolyns first major challenges.
It is understood that a deadline has been pushed back to spring to allow her to get to grips with the issue. Credibility is at stake. ITV has long campaigned for pay-TV operators to pay to carry its main channel, and promoted prospects of a financial boost to City investors.
The so-called retransmission fees row is part of ITVs battle to reduce its dependence on the volatile advertising market. Under previous chief executive Adam Crozier it also spent billions snapping up production companies to make programmes for ITVs own channels and rivals at home and abroad.
Dame Carolyn inherits a company that now depends on advertising for little more than half its £3.1bn revenue, although some of its production businesses are yet to prove their worth as profit generators. Some investors and industry figures suspect ITV may be forced to write down the value of some acquisitions under its new leadership, particularly in the United States.
The advertising market should be relatively benign for Dame Carolyn at least in her first year in the job. In summer, ITV will benefit from large World Cup football audiences, and across the board television advertising spending is forecast by the Advertising Association to expand by 2.8pc in 2018, reversing a 2.4pc decline last year.
Within the growth, spending on advertising to run alongside on-demand programming is expected to accelerate, a field in which ITV has previously lagged industry developments. However, in spring it plans to launch its first addressable advertising services, allowing brands to target viewers based on their location and profiles of their interests. The move will bring ITV more up to speed with Sky, Channel 4 and others, as television advertising comes under increasing pressure from Google and Facebook.
Dame Carolyns arrival at ITV represents a return to the front lines of media prior to easyJet she served as chief executive of Guardian Media Group. Following the appointment of Alex Mahon, the new chief executive of Channel 4, it means that for the first time two major UK broadcasters will be run by women.
Booked 6+ gains on my last leveraged long in ITV (still hold shares), despite some VG volume underpinning recent rises & yesterdays 170.90 close the highest since 24th Oct.
In nutshell: with still holding a tranche of real shares at 174.75 for possible breakout later & mindful this fell to 142+ lows in November, no regrets booking more leveraged gains. Nothing is 100% guaranteed in this game.
Will review my real shares at circa 180+, mindful that mid-October saw resistance at circa 180. But maybe higher, depending on data, as timeframe less of an issue with proper shares. - GLA!
ITV has just signed Gary Neville as a new football pundit. But lets not hold that against the companys shares.
The former England defender has joined for the 2018 World Cup, meaning hes got a decent chance of enjoying his longest ever run in a major international tournament.
While England may routinely disappoint at these jamborees, the broadcasters shares tend to do quite nicely during World Cup years, presumably buoyed by ad revenues.
In 2014, England crashed out in the group stages (under assistant manager Nev), but ITVs shares finished the year around 10% higher. In 2010, when England did (very marginally) better, ITV investors played a blinder, booking profits of 30%.
Can the shares, currently changing hands at around 165.5p, go on a run again? Some City pundits seem to think so, with Goldman Sachs, Citigroup and Morgan Stanley all supporters.
As foreshadowed here and all relevant boards... 2018 trading from tomorrow, so time to repeat last year's "virtual portfolio" challenge. Same rules, as per the papers - equal weighted, valid for the whole year with no switching, full owning-up at year end!
Marks & Spencer
I retain a bias toward UK exposure and 'Value' (the two closely related, obviously), with an expectation that the UK domestic outlook will clarify satisfactorily (if not wonderfully) this year. But it's no slam-dunk... and so hedged with a decent slug of overseas earnings and a general focus on "stock specific" stories - with LLOY the only real pure play on 'UK PLC' and associated sentiment. Ultimately, well aware that it's near-impossible to avoid losers as well as winners, I have asked the question - can I see 15% over 2018 (plus divis)? Without necessarily much help from the wider market.
Four stocks stay in from 2017, with CPI, IMB, ITV and SGC still to justify their original inclusion and getting another chance (SGC was a close call). Bonmarche has done its job as "speculative" midcap retail play; VOD still looks fine to me but harder to see sufficient upside in either valuation or financial reporting; CARD and WTB were tougher choices, both still good for the long term IMHO but I see their respective attractions now more finely balanced against likely persisting near-term headwinds.
I will doubtless be elaborating on the case for each of the "new" inclusions in the course of the year. FWIW stocks actively considered but failing to make the cut (as well as CARD and WTB): Braemar and SBRY (from my 2017 Top 10), then Aviva, BT, Debenhams, Gattaca, Merlin, Morrisons, Trinity Mirror.
FYI I own 7 of the 10 stocks, with all of CPI (still!), WPP, GSK under active consideration (probably in that order). I'd be surprised if I didn't buy into at least one in the course of 2018.
Despite the rise of the streaming giants Netflix and Amazon, there are reasons to be hopeful at ITV. The stock looks cheap at 165.5p, a near three-year low. It remains the largest commercial channel in Britain and a natural home for ad spending. Lest we forget, 2018 is a World Cup year. Although long-in-the-tooth franchises such as The X Factor appear to be in terminal decline, strong viewing figures for Victoria and Broadchurch showed that appointment viewing is not dead yet.
As audiences shift online, ITV is well-placed to tap into growing web video advertising, which has higher margins than TV ad slots. Take Love Island, the most tweeted about British show this year, which had 2m viewers when it aired and a similar amount catching up online. The imminent arrival of Dame Carolyn McCall as chief executive could lead to some changes. A takeover bid is not out of the question as the consolidation in media continues.
That's it for 2017, in market hours anyway, so it is time to tot up the final results for my previously published 2017 Top Ten...
Q1 was not bad (in the end)... Q2 better, outperforming decently... Q3 not so much, a bit of a struggle throughout... and now a reasonable (if selective) Santa rally has delivered (belatedly) a decent enough Q4. It all means a positive absolute return for the year (+1.6%), albeit another good quarter for wider markets means I have underperformed the FTSE 100 by nearly 6% (and around 7% vs FTSE All-Share).
But it's not the full story - I went heavy on income plays, with dividends (including a couple of "specials") delivering a further 5.7%, around 50% more than the UK market yield. So I can point to a total portfolio return of 7.3% for the year - still below the 12% or so returned by the main UK indices, but somewhat nearer respectability - and preserving my status as (distinctly) average fund manager... making you some kind of return on your money, but not actually managing to beat, or even meet, an index.
Star performer, after a pleasing (albeit slightly suspicious) late run, was one of my small-cap speculatives, Bonmarche - up 60% for 2017! Then, at the other end of the size scale, comes Vodafone, an 18% return reflecting a year of solid success... just ahead of Card Factory (up nearly 17% after a rollercoaster ride), although CARD just edges out VOD in total return terms (+26% vs +24%). After that, a good Q4 sees Whitbread end the year up 6%, after 'promising' something much worse for most of it.
But that's it for gains, and 4 "winners" out of 10 doesn't really cut it, I concede. Both Sainsbury and Braemar ended near enough where they started (down just under 3%), but thereafter the disappointments pile up like roadkill... Imperial Brands falling 11%, ITV losing 20%, Stagecoach giving up 24% and Capita's year of woe and warnings means it brings up the rear, some 25% down - with some small solace that it's the only one I still don't own for real (but watch this space!)
How to rationalise this performance picture? Well, looking back at my original post, it seems I predicted it up-front a year ago - I quote... "a vague attempt at balance and diversification across the list, though it's probably still a bit too exposed to the UK economy - and hence any further Brexit downturn. Probably inevitable, given my usual bias towards 'value' and aversion to buying into momentum."
The hope was that the Brexit 'deal', and consequent UK economic outlook, would clarify - while there's finally some sign of that now, for most of the year it's remained mired in the mud of uncertainty and ungentlemanly exchange. There is the (related) theme of Value staying out of favour - albeit with 'green shoots' starting to appear just as the snow comes tumbling - and getting ever cheaper over the year as the market found reassurance in "reassuringly expensive" havens of Quality and Momentum.
So what for 2018? "Double-down" on the combo of cheap UK and underappreciated Value, in the expectation (or 'hope'?) that "this time NEXT year, Rodney".... or capitulate and jump on the market bandwagon, trusting the wheels stay on for another 12 months? Anyone following my thoughts for any length of time will know the answer ... but either way, all will be formally revealed in due course with my Top Ten for 2018 - as I always promised, and likewise enourage others to participate.
FWIW my 'real' portfolio fared better in 2017, up c.11.5% (total return c.15%). Nicely outperforming the FTSE 100 (+7.6%) and All-Share (+9.0%) in both price terms and their total returns of c.12-13%, though lagging the Global Market return of 20%. Given I've owned 9 of my Top 10 stocks for most of 2017 and I didn't set out to pick bad stocks, you can deduce much of my performance came from unexpected quarters - a good advert for diversification, of one's own thought processes and investment instincts as much as sectors and stocks!
"In 2017, interactive investor's sister website Money Observer's Money Maker series has featured some of the leading names in the fund management industry.In each piece, our interviewees explain where they are currently finding value in their ..."
Liberum predicts ITV revenue boost from OnTheMarket listing
Broadcaster ITV (ITV) could be a beneficiary of property portal OnTheMarkets flotation and plan to throw millions of pounds at advertising, says Liberum.
Analyst Ian Whittaker retained his buy recommendation and target price of 330p on the stock, which was flat at 165p yesterday.
He said OnTheMarkets listing aims to raise £50 million most of which is earmarked for an advertising campaign.
This could see a nice tailwind in 2018 for ITV the assumption would be OnTheMarket would weight its campaign to TV to gain maximum reach, said Whittaker.
Assuming £15 million of that £50 million raised ended up on ITV, that would be equal to a c.1% boost in ITV TV net advertising revenue. But it would also prompt rivals such as [Zoopla] and Rightmove to also up spending, providing a ripple effect.
Yes, They are losing viewers to Netflix and Amazon Prime Video (10M subscribers between them in the UK) and You Tube and Facebook are taking bigger and bigger proportion of advertising budgets. ITV's profits therefore will drop and so will their shareprice.
On the other hand it has risen quite a lot since mid November.
It's always darkest before the dawn!
Dixons just came back from the dead , £5k down in November £2k up today!
I bought ITV on hope of takeover and with a good divi I've got to be patient.
Let's see what the new boss can do in January.
Have a good Festive season.
VALUATION SHOULD NOT BE AN OBSTACLE
Valuation is unlikely to be a major issue as UK
stocks have materially underperformed US and
European equities in 2017.
Many of those with UK domestic exposure really
struggled. For example, free-to-air broadcaster ITV
(ITV) is down 22% year-to-date thanks to a gloomy
advertising backdrop. This could provide the spur
for its largest shareholder Liberty Global to make a
In our view ITV is the M&A candidate with the
most potential, given a clearly identifiable suitor, its
status as a unique asset and a free cash flow yield
of nearly 10% based on Liberums forecasts way
above the likely cost of financing any deal.
Net advertising revenue is expected to have fallen 5pc this year although it will have turned positive again in November and December. View that young people dont watch TV anymore Netflix and Amazon are taking viewers.
Special dividends cost £1.1bn over the last five years, stopping them could give the company £800m room for acquisitions to boost its production and digital base, according to Morgan Stanley.
Digital Economy Act may enable ITV to charge cable operators for retransmitting its channels which could bring in £30m a year from Virgin Media, Morgan Stanley estimates.
Contract rights renewal formula that governs how much ITV can charge advertisers for airtime introduced at time of the 2003 merger of Carlton Communications and Granada to prevent price gouging by dominant player. Commercials now on YouTube and Facebook so no longer justified. Big potential benefit to ITV.
Analysts at Jefferies indicate larger audiences for ITV Hub, the broadcasters catch-up service, improve pricing and sponsorship opportunities.
No immediate prospect for takeover by Liberty, but cheap after price fall, trading on less than 10 times forecast earnings, sector peers trade on 13 times.
Advertising concerns have hammered ITV since the summer, leaving the shares trading on just 10 times 2017 forecast earnings, according to broker Shore Capital.
From now until December 25, our TV screens will be filled with catchy jingles, sparkles and cheery taglines.
However irritating this may be for some, its good news for ITV. The broadcaster is forecasting an uptick in advertising revenue in November and December, which it hopes will help offset big declines during the past few months. Annual net advertising revenue is now expected to fall by 5 per cent although it still expects to outperform the wider TV ad market.
The groups third quarter was certainly not a jolly time. Net advertising revenue (NAR) from traditional platforms fell 4 per cent as major corporations under pressure to slash costs continued to cut their advertising budgets. During the nine months to September, NAR fell 7 per cent to £1.1bn.
But ITVs sensible diversification strategy has helped to soften the blow to the overall top line. Sales of non-traditional spot advertising, including those in the app and ITV Hub, rose 8 per cent to £1.4bn during the first nine months. This left total external revenue, which includes money made from sponsorship, down just 1 per cent at £2.1bn.
There was also good news from the groups production arm, which surpassed the £1bn mark for the first time during any nine-month period. Chairman Peter Bazalgette who is filling in the chief executive role before the arrival of Carolyn McCall from easyJet early next year said the division was particularly strong in the US. The ITV Hub, which allows users to watch content on demand, is also gaining momentum, despite intense competition from streaming services such as Netflix and Amazon Prime.
The Hub now has 21m registered viewers, including 75 per cent of the UKs 16- to 24-year-olds. A 41 per cent increase in online viewing helped the online and pay division achieve double-digit revenue growth.
"Buy and hold foe me Jack. Quality company and cheap.Takeover prospects not in the price.
Hi Sound money,
Thanks. I agree with you longer-term. Like many, I'm confident this will be much higher again over time.
But mindful that I also have real shares here at 156.57 & 174.75, on top of another SB, & that I've received a leveraged battering with CNA only last week (significant paper losses there), it's important to me to lock in some leveraged gains in the overall balance of things. Keep the SB account looking healthier.
Today's welcome lift for many stocks also strongly related to PM May's apparent willingness to be far more flexible on increasing the Brexit divorce settlement. But any binding agreement there depends on the EU also giving some guarantees on UK having future access to free trade.
If one side refuses to compromise on what a substantial divorce bill should include by early next week, then some of today's gains may well peter out later. But hopefully not. - All the best!
ITV plc using EPIC/TICKER code (LON:ITV) had its stock rating noted as Reiterates with the recommendation being set at BUY today by analysts at Liberum Capital.
ITV plc are listed in the Consumer Services sector within UK Main Market. Liberum Capital have set a target price of 330 GBX on its stock. This is indicating the analyst believes there is a potential upside of 119.4% from the opening price of 150.4 GBX.
Over the last 30 and 90 trading days the company share price has decreased 15.3 points and decreased 9.6 points respectively. The 1 year high for the stock price is 221.76 GBX while the 52 week low for the stock is 142.8 GBX.
ITV plc has a 50 day moving average of 167.19 GBX and a 200 day moving average of
185.30. There are currently 4,025,408,910 shares in issue with the average daily volume traded being 20,421,829. Market capitalisation for LON:ITV is £6,042,139,020 GBP.
JPMorgan upgrades ITV as European broadcaster concerns 'overstated'
UK broadcaster ITV was boosted by an upgrade from investment bank JPMorgan Cazenove, which views the European sector as markedly undervalued by the market, with addressable-TV a development that "will transform TV" for advertisers.
Cazenove upped its recommendation on ITV to 'overweight' from 'neutral' but trimmed its 12-month target price to 185p from 204p, with ITV shares in November having fallen below 150p for the first time since 2013.
Cheap valuations, low expectations and overstated structural concerns were among the main reasons for analysts' positive view of the sector, also leading to upgrades for the likes of Spanish broadcaster Atresmedia and German company RTL, but with Germany's ProSiebenSat the top pick.
"The market has extrapolated from short term ad weakness to overstate structural concerns while it is overlooking new opportunities for growth," analyst Daniel Kerven said in a note on Tuesday.
While some analysts express concern that traditional broadcasters face difficulties in an increasingly digital market, Kerven asserted that ITV and others are capable of adjusting.
With viewing shifting from linear to 'time shifted' TV, online video and over-the-top (OTT), he said the impact is "mitigated by a vastly extended media day and TV continues to offer something unique to advertisers - enormous scale, fast reach, very high quality ad inventory and an attractive contextual environment for brand building".
Subscription video on demand (SVOD) and addressable TV are two new developments that analysts feel offer more potential than threats.
"Euro broadcasters have more to gain and less to lose than their US peers. SVOD competes for eyeballs but not ad revenues and drives lower pay-TV penetration and less fragmentation," Kervan said, noting that broadcasters can sell content into the global SVOD window, tap wholesale and retail distribution fees and offer targeted advertising.
Addressable TV "will transform TV for viewers and advertisers" as it offer the ability to deliver targeted ads to individual households, giving consumers more relevant ads and advertisers data-driven targeting and capped frequency.
"It will bring new local advertisers to TV and allow it to contest the larger and faster growing performance marketing opportunity - just one action per household per annum could double TV revenues."
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