The picture could be brighter for ITV plc. Its share price, the lowest it has been for six years, has halved since its July 2015 peak. Whispers circulate that the stock is “undervalued” and, conversely, that investors’ scepticism is entirely justified because how can a free-to-air commercial broadcaster hope to survive independently much longer?
A low share price could prove honey-like to any passing bidders – any bidders that fancy a UK-based operator in an awkwardly evolving industry while Brexit remains unresolved.
Sunday night’s underwhelming two-award haul at the Baftas (Britain’s Got Talent and the resurgent I’m a Celebrity… Get Me Out of Here! were the only ITV-broadcast shows to triumph) followed last week’s quietly humdrum first-quarter trading update, which was not well-received by the market. Its shares fell 6 per cent on the day, and did so again yesterday.
Its morning Jeremy Kyle tabloid talk show has now been suspended following the death of a guest shortly after filming.
The trading statement had some uplifting notes. ITV chief executive Carolyn McCall highlighted a 16 per cent rise in viewing hours on its on-demand service, an agreement with an ad tech company to introduce more sophisticated online sales and progress on the UK launch of BritBox, its streaming joint venture with the BBC.
Still, it was not hard to find the grit. ITV’s total revenues are running down 4 per cent and its advertising income is down 7 per cent. The outlook is on the dismal side, too, with the company expecting advertising revenues to decline 6 per cent in the first half of 2019.
This is partly because the year sadly lacks a football World Cup to get Pringles, Budweiser and Domino’s Pizza excited. But it is also because “continuing economic and political uncertainty” – the torturous Brexit impasse – has taken a toll on demand for advertising.
The subdued outlook, incidentally, doesn't bode well for Irish broadcasters like RTÉ and Virgin Media Television, both of which derive a significant chunk of their commercial revenues from advertisers that fix their Irish spends in London.
Broadcaster woes
So who are ITV again? Sometimes the journalistic shorthand used to describe companies can be as revealing as it is reductive. Last week, Press Association plumped for “Love Island broadcaster ITV”. The foregrounding of the summer reality hit, cited by ITV as a key plank in its “exciting schedule”, is fair enough. It’s “broadcaster” that is the properly troublesome word.
Unlike the BBC and RTÉ, which at least have the buffer of public funding, or Virgin Media Television (formerly TV3), which is owned by cable giant Liberty Global, ITV is a standalone broadcaster.
This increasingly feels like a vulnerable status in an age when some competitors have subscriber-rich telecoms companies for parents, while others are giant tech companies bestriding the world with billions to spend on content.
Four years ago, ITV’s share price had been buoyed by a period of speculation that Liberty Global would bid for it. In July 2015, the European strand of billionaire John Malone’s media empire increased its stake in the broadcaster to 9.9 per cent. It said then that it did not plan to make an offer.
Despite its purchase of TV3 being widely regarded as a toe-dipping exercise for a full ITV acquisition, and despite the waning of the ITV share price to arguable “good value” status, Liberty Global has held firm on this position.
It’s not as if everybody would welcome such interest. The thought that ITV could or should be swallowed whole by a multinational seems like logical M&A chatter now, but in the context of ITV’s history it’s seismic.
Before ITV plc existed, Independent Television was a network of multiple regional TV franchises with no common ownership. The process by which 13 out of 15 franchises coagulated under one corporate roof – the last to join being Northern Ireland’s UTV – generated much regulatory hand-wringing.
Now, amazingly, and not at all healthily, the days of worrying about the fate of regional broadcasters have been superseded by concern for the future of national ones.
Production business
ITV’s mitigation efforts have involved lessening its dependence on advertising by expanding ITV Studios, the production and distribution arm that supplies Virgin Media Television with shows like Coronation Street, Emmerdale and The Graham Norton Show.
The latter, though broadcast on BBC One, is made by Norton's So Television, a subsidiary of ITV Studios. Likewise, the BBC-commissioned Line of Duty, the most-watched programme in the UK so far this year, is made in Belfast by World Productions, another ITV Studios subsidiary, meaning ITV can reap the export benefits.
But the big, belated bet now is the woefully named BritBox. The BBC-ITV streaming service already exists in niche capacity in the US, where it costs $6.99 a month. Prices in its domestic market, and indeed whether it will be available in the Republic, have not yet been confirmed.
Even if the service does launch in the UK, as suggested, in the second half of 2019, its ability to thrive will be so much harder than it should have been. In a cautionary tale for regulators everywhere, plans for a joint streaming venture between ITV, the BBC and Channel 4 were blocked by competition authorities in 2009 – before Netflix crossed the Atlantic and cleaned up.
It is something to remember whenever a politician here valiantly calls for an “Irish Netflix”. The time for that idea may have passed.
