ITV stock flounders
Brit network becomes ripe for takeover
On Friday the stock price sank to 97p ($1.80) following reports that ad projections for September could be down by around 12% from last year. ITV, which successfully fought off a takeover bid in March involving Goldman Sachs, needs to have a good autumn after what has so far been a poor summer when even the World Cup failed to improve revenue in soccer-mad Blighty.
Media stocks had a bad week generally in the U.K., but for some time, analysts have regarded the £1 level as the tipping point whereby ITV becomes ripe for takeover.
Citicorp analysts citied the rise of multichannel TV in the U.K. and the growth of "search" technology -- enabling auds to control their own viewing schedules via DVRs or "smart videos" -- as threats to ITV's business model. ITV1's World Cup ad coin is set to be down $73 million on the amount generated by the last tournament in 2002, despite a 22% increase in viewers, according to media agency Initiative.
On July 9, ITV1 suffered its worst-ever daily ratings performance as the web's share dropped below 10%. It could only manage a 9.1% share, compared with BBC1's 39.2%, because most British viewers opted to watch the pubcaster's coverage of the World Cup final instead of ITV1's; the webs shared rights to the tournament, but both showed the final.
Its overall share of the week was also its lowest ever -- 16.5%, lower than ITV1's previous worst (May 29-June 4), when it recorded a share of 18.3%. ITV's interim results will be announced Aug. 9. Some commentators have speculated that embattled CEO Charles Allen, booked to give the keynote address at this year's Edinburgh TV gabfest Aug. 25, may not survive until then.
Allen is lobbying U.K. media regulator Ofcom to drop a ruling that effectively means advertisers must be refunded the lower-ratings fall. He also wants Ofcom to allow ITV to dump tyke shows from the ITV1 schedule and replace them with mainstream entertainment fare.
This, in theory, would allow ITV to compete more effectively against rivals like commercial pubcaster Channel 4, which attracts a large audience for Endemol's quizzer "Deal or No Deal" when ITV1 is showing kid fare. To add to the gloom surrounding the channel, ITV1's summer reality skein "Love Island," which bowed recently and is designed to combat "Big Brother," is so far being trounced by the Endemol show.
