Free-to-air broadcaster ITV (ITV) dips 1.3% to 208.7p on news chief executive Adam Crozier is set to leave after seven years in post.
We’d normally expect shares to fall by up to 10% when a well-respected and successful boss hands in his notice.
In ITV’s case, market commentators have immediately speculated that the media group is now even more vulnerable to a takeover bid - hence the muted share price reaction.
ITV is one of our top share picks for 2017 for various reasons including takeover potential.
A SUCCESS STORY
Through the course of Crozier’s tenure, the share price has increased 200%, debt has been substantially reduced and the company has become increasingly profitable. A 2009 pre-tax profit of £25m is dwarfed by 2016’s total of £847m.
Chairman Peter Bazalgette, who is taking an executive role for an interim period, says: ‘Under Adam, external revenues have grown by over a billion pounds, non-NAR revenues have more than doubled to almost £1.9bn, EBITA (earnings before interest, tax and amortisation) has grown by 338% and adjusted earnings per share have grown by 844%.’
Finance director Ian Griffiths will step up to a combined role that includes being chief operating officer. He will lead the executive team until Crozier’s replacement is appointed.
ETX Capital analyst Neil Wilson says: ‘The sharp deprecation in sterling makes ITV even more appealing as a takeover prospect.
‘The weak pound has spurred speculation about one of the big US media groups - such as John Malone’s Liberty Global - to make an offer. BT (BT.A). Viacom, Comcast are others in the mix that has been talked about.’
ECHOES OF THE PAST
Liberty already owns nearly 10% of ITV. Liberum analyst Ian Whittaker comments: ‘Potentially the most interesting part of the announcement is that Ian Griffiths is to step up to take the combined role of COO/ FD (from FD) while Sir Peter Balzagette will become executive chairman.
‘This has echoes of a decade ago when Ian Griffiths was in his previous job at Emap as FD and Emap's then CEO stepped down.
‘Ian Griffiths and the chairman (Alun Cathcart) ran the company together without a CEO and were responsible for breaking up Emap and selling off its assets at a high price (and just before the 2008 financial crisis).’
