A Thorough Insight Into ITV Share Price

ITV is one of the UK’s leading media companies, operating the country’s largest commercial public broadcast network. As a publicly traded company on the London Stock Exchange, the ITV share price reflects investor sentiment on this British media icon’s performance and prospects.

In this article, we’ll provide background on what ITV does, the reasons behind recent changes in ITV’s share price, and what investors might expect going forward. Read on to learn more about the factors impacting this company’s valuation.

What does ITV do?

ITV operates multiple free-to-air channels like its flagship ITV channel and digital sibling ITV2, delivering entertainment, drama, news, and sports programming to viewers across the United Kingdom. As a commercial public broadcaster, ITV derives most of its revenue from advertising sales during its shows.

The company also owns ITV Studios, one of the country’s largest production companies globally. ITV Studios creates much of the original content airing on ITV’s channels, including hit shows like Coronation Street and I’m a Celebrity, Get Me Out of Here!, and Love Island.

At the same time, ITV Studios produces shows for competing UK broadcasters like the BBC, Channel 4, and Sky, demonstrating the production arm’s ability to create global hit formats and finished programming. On top of this domestic production business, ITV Studios sells formats, ready-made shows, and intellectual property rights to other production companies internationally.

This worldwide distribution business continues growing at a rapid clip. In 2021, ITV Studios delivered over £100 million in revenue from productions in the Nordic region alone as it tapped into strong demand from streaming platforms.

Who is the main shareholder of ITV?

ITV’s main shareholder is Liberty Global, an international telecommunications and media group, which owns 9.878% of ITV based on data from MarketScreener, a leading financial news website across Europe and North America.

This stake demonstrates Liberty Global’s belief in ITV’s capability to transition towards digital content production on a global scale across both traditional networks and streaming platforms.

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Reasons for changes in ITV share price

The ITV share price has seen significant volatility recently, driven by multiple factors impacting investor sentiment.

Competition from streaming services

One major issue has been competitive threats from streaming platforms like Netflix, Amazon Prime, and Disney+. Over the last decade, these on-demand entertainment services have disrupted the TV landscape, capturing younger audiences moving away from traditional scheduled programming.

This has put pressure on ITV’s broadcasting revenue stream, as viewing numbers – especially among 16-34-year-olds – have declined. These evolving viewing habits have also led advertisers to shift marketing budgets to digital and online platforms. ITV’s total advertising revenue dropped 16% in 2020 due to the pandemic accelerating cord-cutting trends.

However, ITV has worked to transform its business model for the streaming era. The ITV Hub on-demand platform has growing subscribers, while BritBox, ITV’s joint streaming venture with BBC Studios, reached 2 million UK subscribers in 2021. Achieving strong growth across these digital products could offset future broadcasting declines.

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Performance of ITV studios

In contrast to its legacy broadcasting arm, ITV Studios has rapidly grown in recent years. By producing popular global shows, ITV Studios has diversified the company’s revenue streams beyond reliance on the UK’s structural TV declines.

In 2021, total ITV Studios revenue increased by 24%, representing the division’s highest-ever yearly growth. As this high-margin production business continues expanding through new studio acquisitions and distribution deals with streaming platforms like Netflix and Amazon, it offers investors confidence that ITV can transition towards a more digital, global studio model that is better insulated from disruption.

Economic conditions

Broader economic troubles have also weighed on ITV’s valuation and share price performance. Advertising spending is highly correlated to overall economic health, with financial recessions leading brands to pull back marketing budgets. So fears over a potential UK recession, rising inflation, and falling consumer confidence have sparked advertiser concerns.

This range of challenges – from evolving viewer habits to economic uncertainty – has put pressure on ITV’s business. However, the strong performance in 2021 demonstrated ITV’s capacity to navigate industry changes through initiatives like growing its global production arm.

Current valuation and outlook

The ITV share price has rebounded over 50% from pandemic lows but remains below pre-COVID levels. The stock trades around half its 2018 high, reflecting ongoing investor concerns over structural declines in the traditional broadcasting model.

Shifts in viewer habits, especially among younger 16-34-year-old demographics, continue posing long-term risks to ITV’s advertising revenues. However, the company invests in its digital presence and streaming capabilities to drive future growth and engagement.

The ITV Hub streaming service now has over 34 million registered users as of 2022, while subscription video-on-demand platform BritBox, ITV’s joint venture with BBC Studios, has surpassed 2.7 million subscribers - encouraging that ITV can build the next generation of revenue streams.

Economic recoveries across major markets like the UK and Europe are forecast to support modest advertising growth in 2023. Analysts predict ITV’s total ad revenue could improve this year if macro conditions continue recovering. This would provide a cyclical boost to investor sentiment around ITV’s core revenue stream in the near term.

However, despite these favourable short-term forecasts, the long-running structural question marks over the viability of ITV’s broadcasting model, which means shares continue trading at a historical discount. Further growth in digital products and global production will be vital to reviving ITV’s valuation.

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 To recap briefly

ITV’s recent stock volatility has been driven by shifting viewing behaviours, streaming’s disruption of broadcast television, and economic uncertainty impacting the advertising market.

However, the strong performance and global potential of ITV Studios offer an upside case for investors. ITV’s shares could rebound if the production division continues compensating for broadcasting declines.

Before trading on ITV’s price movements, investors should closely monitor updates on economic recoveries, the performance of flagship shows, and the growth of ITV’s digital products. These factors determine whether bearish or bullish outlooks define future share price action.

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