Analysis by Liberum suggests free-to-air broadcaster ITV (ITV) is pricing in an advertising decline of post-Lehman’s proportions.

The company was one of the more significant victims of Friday’s Brexit related sell-off. Its shares fell 20% as investors fretted over the impact on TV advertising. It is down a further 4.2% today to 167p.

Based on a share price of 174p, Liberum says an 8.7% decline in TV advertising revenues in 2017 (compared with 8.3% in 2009 post the collapse of Lehman Brothers), would feed into earnings per share of 16.9p. This would put the stock on a 2017 price to earnings ratio of 10.5 times.

The broker puts the prospective dividend yield at 9% (including the special dividend).

ITV’s Scottish counterpart STV (STVG) is currently down 13.8% on Thursday’s close at 304p. Pay-TV giant Sky (SKY) has given up 8% over the same time frame to trade at 820p.

Print media has also taken a battering, with Johnston Press (JPR)Daily Mail & General Trust (DMGT) and Trinity Mirror (TNI) falling 20%, 8.9% and 10.2% respectively in the fall out from the referendum result.


Issue Date: 27 Jun 2016