Member Info for NigeCo

Part Three.....

Without a bid, investors might have to wait longer for a return – especially if they bought close to the peak of over 280p it last hit nine years ago. The withering of its operating margin from 26 per cent then to just 9 per cent last year hasn’t helped.

The X factor

But there were extenuating circumstances to last year’s fall – 2023 represented the peak of its investment in its own streaming platform, ITVX, which launched two years ago and has already become “the UK's largest commercial broadcaster video-on-demand platform”, according to ITV’s chief executive Carolyn McCall.

It is the fourth-most considered streaming service in the UK (behind Netflix, Prime and Disney+) and has ambitions to be in the top three within the next couple of years, chief viewer officer Jane Stiller said.

It is also the fastest growing. In the two years since its launch, the number of streams watched are up 77 per cent on the prior two-year period.

One advantage is that this has brought in a younger audience, with 56 per cent of those watching streams under the age of 55, compared with just 33 per cent for total TV viewing, said ITV’s director of content, Rosemary Newell. Another is that it means ads get watched, overcoming the problem that commercial broadcasters have had since the invention of the video recorder of people skipping through ad breaks.

ITV’s total digital revenue grew by 19 per cent to £490mn last year and the company has set a target to increase this to at least £750mn by 2026. It’s also been tackling overheads, announcing in its third quarter that it had found an additional £20mn of net cost savings, on top of the £40mn it had pledged to deliver through a restructuring and efficiency drive.

Analysts are therefore expecting a 17 per cent improvement in full-year operating profit this year, and with dividends expected to remain steady at 5p, the shares currently offer a yield of nearly 7 per cent. With about £53mn of the proceeds from the sale of its half of Britbox still to be spent on buybacks, there are enough positive catalysts to suggest a re-rating should be achievable even if no suitor emerges.

Part Two....

As a result, the share of advertising spend taken by European broadcasters has almost halved, from around 28 per cent a decade ago, he adds.

This younger cohort is currently only responsible for about 6 per cent of consumer spending, but this figure is expected to rise to a quarter by 2035. The fear that advertisers will follow them is perhaps the main reason why sector valuations are depressed, with companies trading at an average enterprise value of around 6.5 times cash profit, according to FactSet.

And yet somehow TV companies are continuing to squeeze more revenue from advertisers, with revenue growing by an average of 2.5 per cent over the past decade, according to Bernstein, which forecasts continued growth of 2.8 per cent over the next four years.

They are able to do so because, in an increasingly fragmented media landscape, they can charge “a premium for mass market reach”, Baker says. “The attraction is that you’re avoiding wastage. If you can advertise once to 6mn people instead of six times to 1mn people, you avoid overlap.”

Value case

On top of this, ITV has something of a crown jewel that its European peers lack – a studios business that makes and then sells English language programmes to broadcasters around the world.

ITV Studios generated more than half of the group’s revenue and 58 per cent of its adjusted cash profit last year and is the piece of the company that is of most interest to bidders such as CVC and Redbird IMI, according to Sky News.

Any break-up would be a complicated affair – particularly as 29 per cent of the revenue ITV Studios ‘earns’ is for content it currently produces for itself. But it might also be the only way of releasing the value that Shore Capital analyst Roddy Davidson argues is trapped within ITV’s “stubbornly underwhelming” valuation.

ITV is currently valued at just over £2.7bn, but Davidson estimates that the production business alone is worth £2.3bn-£2.5bn – possibly more if a bidding war broke out.

Analysts point out that RedBird IMI paid $1.45bn (£1.15bn) for All3Media (maker of The Traitors and Gogglebox) earlier this year, which was a multiple of 10.7 times Ebitda. Similar deals over the past decade have been done at 10-12 times Ebitda.

Applying a 10 times multiple to ITV Studios would value it at over £3bn, and if a “discounted” multiple of six times was attached to the remainder of the group, it would be worth another £1.65bn, according to Bernstein’s numbers. Based on these numbers and subtracting its £600mn of debt implies an equity valuation of around £4bn, or 105p a share – an almost 50 per cent premium to the current share price.

Yet Baker also thinks ITV’s bosses would want to avoid a break-up “unless it was under a significant amount of shareholder pressure”, given the integrated nature of the studios arm.

Without a bid, investors might have to wait longer for a return – especially if

This broadcaster has an edge over its rivals

Its production arm could be worth more to a bidder than the group's entire market capitalisation. Takeover rumours seem to be the only thing that have put any spark into ITV (ITV) shares lately.

The television company has been a perennial underachiever, having lost 50 per cent of its value over the past five years. After reaching a 12-month high of 89p in July this year, the shares appeared to be reverting to type, slipping back to 62p in November. They perked up again, however, when Sky News reported interest from several buyers for some – or all – of the business. Private equity firm CVC Capital (NL:CVC) and broadcaster Television Francaise 1 (FR:TF1) were named as potential suitors. We have been here before, of course. Two years ago, the Financial Times reported that management had been exploring a partial sale of the ITV Studios business to try to unlock some of the value that it felt was trapped in the business. Despite some big investments made in streaming and content since then, and £182mn (as of mid-December) being spent on buybacks, ITV shares are just as cheap now as they were then.

In some ways, this is understandable. Its financial performance has worsened, with adjusted operating profit declining by 12 per cent in 2022 and then 32 per cent last year. Things haven’t gone swimmingly this year, either. Revenue fell by 3 per cent in the first half and 8 per cent in the third quarter, with the company blaming delays in the delivery of new shows on the overhang from last year’s Hollywood actors’ and writers’ strikes.

Most of the analysts tracked by FactSet are of the view that at its current rating, ITV is at least fairly valued, if not overvalued.

On a forward price/earnings multiple, ITV sits between its European counterparts – below Germany’s RTL (DE:RRTL), but ahead of France's TF1 and Italy’s Media For Europe (IT:MFE), owner of the Mediaset network. To varying degrees, all of these companies are grappling with the decline in traditional, or linear, TV, which has weighed on valuations.

TV go home

In the UK, the amount of TV watched live or on catch-up fell by 6 per cent last year. Viewers watched an average of 109 minutes of live TV per day, down from 174 minutes in 2017, according to communications regulator Ofcom.

The fall is due partly to the growth in popularity of video streaming platforms such as Netflix (US:NFLX), Amazon Prime and Disney+, but also the fact that many young people are not watching TV at all, instead turning to YouTube and TikTok. According to Ofcom, less than half of 16-24-year-olds tune into live TV over the course of an average week.

This is not a new development. Over the past decade, the compound annual growth rate of live TV viewing among people born after 1997 is minus 12 per cent, according to Bernstein analyst Simon Baker. As a result, the share of advertising spend taken by European broadcasters has almost halved, f

"Honourable"

Contrarian, wrong on everything. You're nothing more than a board disruptor who's intentions are not honorable. Anyway enough arguing with unemployed tools for today. Things to do, life to live.

Morning Pogo, yes I would have to agree with you regarding Amazon, they would be a good fit. I wouldn't rule out John Malone (Virgin Media) who is still ITV's largest shareholder around 10%. One move could start a bun fight. Interesting times ahead.

"Where is Nige to tell us about the ADRs? lol"

Contrarian, unlike you I don't spend all day and evening posting at 10:30pm on this forum, you made 25 posts yesterday, with just one of your aliases, I have a life outside of this board. You should find yourself a hobby or better still get a job. You won't find a miss right on here.

"Good luck tomorrow - Powell tanked US markets lol"

Wetting yourself in anticipation of a share price fall is a sad state to be in. The current share price is 72p the same price you supposedly took a short out. Lol

Contrarian, I was on the wind-up to see if you would take the bait..... You duly obliged.

Do I believe Goldfinger, no he's been saying the same thing for over two years. Although other posters have said in the past that he's been proved right. I take what I read on these boards with a large pinch of salt.

Pogo, there's a poster over on ADVFN board (if you're not aware) called Goldfinger16, he claims to have a contact over in the USA. Now I can't personally vouch for his comments, I must also add that he has been reporting this takeover speculation for the past two years, however other ADVFN board members have said in the past that GF has a very good track record of past takeovers, where he was proven to be on the money. Goldfinger's contact says that Apple will buy ITV. It will be interesting to see if he's proved right in the end. I enclose below two comments from GF.

10/12/24 Goldfinger16........ "I spoke with a major mover in Media yesterday (not my source) who tells me without any doubts that a bid worth $6bn is being finalised. As my source says Apple is the buyer, this guy thinks differently, his info is buyer in the EU, Banijay has been looking at ITV for 24 plus months and are in the fray. Who knows Justice, could there be a flurry of bids in the pipeline?"

12/12/24 Goldfinger16......."My US source says the sum of ITV's parts could be three fold on the £2.8bn Mkt Cap today! Apart from Studios owned and very profitable, ITV create some of the world's most successful unscripted formats which they license globally to maximise the value from their programme rights. ITV own the rights to a significant catalogue of programmes that are licensed to broadcasters and streamers internationally through their own global distribution network. A bidding frenzy is going to happen here very soon!"

Don't shoot the messenger....

NOW SIT BACK AND WATCH THE TROLLS GO IN TO OVERDRIVE TO DISCREDIT.

Excellent comment Janus, summed up perfectly.

Pogo, you make some very valid points regarding share buyback and dividend. Looking forward maybe our BOD can look at a dividend increase, or a further share buyback.

Its a case of separating the wheat from the chaff. Contrarian has made a total of 17 comments in the past 2 days, all with intentions of insulting someone. Nothing worth reading, before he changes is alias to Tom Tit with TT complementing him. Its Laughable. However the above two comments from Janus & Pogo reminds me of why I visit these boards, occasionally its worth it. Trolls need to get a job instead of living off my taxes.

Excellent interview, SMS discusses Stagwell's $700m alleged takeover offer.

https://www.youtube.com/watch?v=C12RJzVpdXU

After being away from this ITV discussion board for two year I forgot how petty Contrarian/Tom Tit can be, he's made 7 comments today, they all add nothing to the board. In his bully boy tactics he attempt to silence anyone who says anything remotely positive about ITV. He must be watching this board all day long policing it, in case someone says something that doesn't fit his narrative. He hasn't learnt yet than nothing anyone says on this discussion board will make any difference to the share price of a FTSE 250 company.

My guess is this poster with many aliases was a school bully, or was indeed bullied himself. He should grow up and get a job. Nobody is interested in the slightest with regards his trades that he feels the need to boast about. What a tool.

"Talk is around 100p, prima facie it does seem to be credible this time, makes a lot of sense for a break up..any thoughts?"

Maxus, the analyst a few weeks ago gave his opinion of around 130p per share, valuing studios @12X = 68p & Broadcasting @10X = 63p per share. Total just under £5 billion.

Https://www.youtube.com/watch?v=LUP694BVph0&t=546s

"Nige I'm wondering if 123 is a she due to the constant obsession with yourself."

Raky, I was invested in ITV for 5 years. I sold out over 2 years ago. Before I bought back in again recently I visited this board and lord behold Tom Tit was commenting about me, my ears must have been burning. I hadn't made a comment for over 2 years. I must live rent free in his disturbed mind. He needs to get a job.

Steinbecking, excellent comment, you know Contrarian/Tom Tit so well. I agree with everything that you've said, In my opinion he visits this forum to vent his own life's failing / frustrations on others, its not healthy. I did advise Tom 7 years ago to go and visit his GP to get the help that he needs, sadly we can all see he failed to take my advice.

Contrarian.... "old codger Nige has moved to the other board"

Funny, Tom Tit was always referring to my age 3 years ago, with the same vulgar language. Another give away that you are the same troll. If you're lucky you too will be old one day, if you think that 58 as old. I was brought up to always respect my elders, its clear to everyone that your parents failed you, or is it that you failed them. Both most likely.

Have you heard the saying..... "if you can't say something nice, don't say anything at all" If the cap fits, wear it.

Https://www.youtube.com/watch?v=8-iu8SUZkJ8

Donald Trump is behind the surge in major takeover deals across Wall Street as bosses expect a bonfire of red tape in the US, a City tycoon has said.

The president-elect has triggered a surge in “animal spirits” across American markets which has led to a string of major tie-ups in recent weeks, according to Sir Martin Sorrell.

Mr Trump will return to the White House in January after an election campaign where he promised tax cuts, deregulation and tariffs on non-American goods.

On Monday, it emerged that Omnicom and IPG were in talks over a merger that would create the world’s largest advertising agency.

It was also announced that Cadbury-owner Mondelez is exploring an acquisition of Hershey, in a move that would create one of the biggest confectioners in the world.

Sir Martin Sorrell, who is executive chairman of S4 Capital and was founder of advertising group WPP, told BBC Radio 4’s Today programme: “In the second Trump era, what we’re seeing is a huge increase in what I call ‘animal spirits’ in America.

“I’ve never seen it quite so strong on the cusp of the second Trump presidency. The deregulation feeling that Trump is generating means that deals and the North American market are big and strong.”

“The most important thing about Omnicom and IPG is their focus on the North American market which I think is going to be very strong.

“Deal mania is on the rise.”

https://www.telegraph.co.uk/business/2024/12/10/ftse-100-markets-latest-news-uk-trump-takeovers-wall-street/

Oops, correct link...

https://www.thisismoney.co.uk/money/investing/article-14166589/How-cash-DEAL-MANIA.html?ito=native_share_article-nativemenubutton