Broadcaster ITV (ITV) falls 5.7% to 180.1p as investors are disappointed with the first quarter trading update. Viewing figures aren't great with ITV seeing a 5% drop in its share of channels that carry advertising. There's also a 4% drop in revenue for its Studios production business, blamed on the phasing of programme delivery.


Investec analyst Steve Liechti calls the trading update 'More Zzz than X Factor'.


ITV is confident that the performance will get better as the year progresses. June sees the launch of its new paid-for channel, to be aired on Sky, called ITV Encore. This will show a mixture of classic drama repeats and new productions.


The World Cup football is also expected to provide a tidy cash injection thanks to higher-than-normal advertising rates. Yet investors must remember that the market will have already priced in this likely financial boost, which means ITV shares are vulnerable to a share price correction if the broadcaster doesn't deliver a knock-out financial performance.


The media giant reckons second quarter advertising revenue will be up 12% to 13% year-on-year and that it will outperform the TV advertising market in the first half and over the full year.


ITV says its broadcast and online operations are doing well, revealing a 3% rise in revenue to £480 million. Westhouse Securities analyst Roddy Davidson focuses on the positives by saying: 'We are pleased by the positive momentum and robust outlook comments within this morning’s update and plan to raise our estimates to reflect a more bullish outlook for advertising spend / the impact of last week’s acquisition of US content producer Leftfield Entertainment.


Davidson adds: 'Against this backdrop and in view of the group’s positive medium term fundamentals (increasing breadth of content portfolio, unrivalled ability to deliver a mass market TV audience to advertisers, quality / consistency of its management team and strategy, compelling cash flow characteristics and attractive EPS and DPS growth prospects) we regard recent share price weakness as unjustified.'

Issue Date: 14 May 2014