Nagging concerns that advertising alongside this summer’s football World Cup would be a damp squib are knocked down by free-to-air broadcaster ITV (ITV) in its first quarter trading update.
As Liberum analyst Ian Whittaker explains, media buyers had been feeding back to the analyst community that the market might only be up by single digits year-on-year.
However, ITV is guiding for national advertising revenue (NAR) to be up by 15% in June when the tournament kicks off in Russia.
Accordingly, ITV shares rise 4.4% to 157.8p, breaking a period of underperformance.
NAR for the first half as a whole is expected to be flat, a reduction in the guidance for a modestly positive performance after a weak April.
VIDEO ON DEMAND BOOST
Reflecting the growing importance of advertising associated with the company’s ITV Hub video-on-demand (VoD) service and sponsorship revenue, the company has started including these contributors alongside NAR.
This total advertising measure is up 3% for the first quarter, boosted by a 41% advance in VoD ads, and is guided at 2% over the first half.
Liberum’s Whittaker reiterates his ‘buy’ recommendation and 265p price target. He comments: ‘We expect forecasts to remain broadly stable but, after negative expectations around June, the shares may see a turn in sentiment.’
New chief executive Carolyn McCall is set to update on the company’s strategic refresh alongside interim results on 25 July.
The company has also scheduled a capital markets day for 19 September where analysts and investors are expected to learn more about the business on a more in-depth level.
