Interactive Investor

ii view: upbeat ITV is rewarding income seekers

This UK media icon is now competing against the global streamers such as Netflix and Disney. We assess prospects.

13th May 2024 11:14

by Keith Bowman from interactive investor

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First-quarter trading update to 31 March

  • Total revenue down 7% to £887 million
  • Media & Entertainment (M&E) revenue up 2% to £505 million
  • Studios revenue down 16% to £382 million
  • Net debt of £272 million, down from £553 million in Q4


  • Expects full-year Total Advertising Revenue at M&E to be up around 12% in the second quarter compared to Q2 2023
  • Expects Studios revenue for the full year to be broadly flat

Chief executive Carolyn McCall said:

"ITV continues to execute its strategy successfully.

“We have a strong pipeline of programmes, good demand for our quality content as we increasingly diversify our customer base towards streamers and the phasing of deliveries is heavily weighted to the second half of the year, including Hells Kitchen US, The Better Sister, A.C.A.B, Showtrial and Ludwig.”

ii round-up:

ITV (LSE:ITV) is an integrated producer and broadcaster. 

Its Media and Entertainment business delivers content through linear TV broadcasting as well as via digital on-demand or its streaming platform ITVX. 

Its Studios business produces, owns and distributes content for both ITV channels and third parties in the UK and overseas. 

For a round-up of these latest results announced on 9 May, please click here.

ii view:

Holding 13 of the UK’s 15 regional television licences, ITV is the largest and oldest UK commercial broadcaster. Employing over 6,500 people and a constituent of the FTSE 250 index, it now competes against rival streamers such as Netflix Inc (NASDAQ:NFLX), Apple Inc (NASDAQ:AAPL) and Inc (NASDAQ:AMZN) which owns Prime. Media and Entertainment, which includes its ITVX streaming operation, generates its biggest slug of revenue at close to three-fifths, with its programme making Studios division making up the balance.

For investors, the tough economic backdrop and its impact on advertising sales is not to be overlooked. The importance and volatility of the sporting calendar in generating ad sales warrants thought, a forecast price/earnings (PE) ratio above the three-year average suggests the shares are not obviously cheap, while its competition now not only includes state broadcaster, the BBC, but global streamers such as YouTube owner Alphabet Inc Class A (NASDAQ:GOOGL), Netflix, The Walt Disney Co (NYSE:DIS), and Paramount Global Class B (NASDAQ:PARA).   

On the plus side, a diversity of revenues exists, from programme content sales to monthly streaming subscription fees for ITVX and advertising sales. Cost reduction remains a high focus, with ITV on target for a £40 million cut this financial year, while the globalisation of media via the internet may eventually see consolidation across the industry, potentially including ITV. 

For now, and despite ongoing risks, the share price has shown potential with a 38% rally since the end of February, while a forecast dividend yield of close to 6% offers something for income focused investors.


  • Diversity of revenues
  • Attractive dividend (not guaranteed)


  • Intense global competition
  • Advertising revenues are economically sensitive 

The average rating of stock market analysts:

Strong hold

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