A first quarter update from ITV (ITV) is being overshadowed by revelations about the content of the Government’s white paper on the future of the BBC and threats from the Vote Leave lobby in the upcoming vote on the UK’s membership of the European Union.

Up sharply initially in response to the trading statement, any gains are being handed back as early reports suggest the plans for the BBC are not as dramatic as expected. The shares are down 1.6% at 211.9p.

The market may also be spooked by ITV’s revelations of weakness in TV advertising which it blamed on concerns over a possible Brexit. Vote Leave argues the broadcaster is biased towards the Remain camp and is threatening a legal challenge over a TV debate which will pit David Cameron against Nigel Farage rather than any of the prominent Leave campaigners within the Conservative party.

Elsewhere the company reported a 3% increase in viewing share and guided for double-digit revenue and profit growth for 2016 as a whole.

There had been speculation a reduced role for the BBC post the renewal of its charter would benefit commercial broadcasters like ITV but it does not appear the Beeb’s entertainment remit will be noticeably curtailed. The full white paper is set to be published later.

Liberum analyst Ian Whittaker – for whom ITV is a key ‘buy’ – reiterates a price target of 375p. He says: ‘Our call on ITV is based on the positive fundamentals and not short-term advertising trends. In that regards, ITV's position looks strong, the free-to-air TV broadcasters are in a much better place structurally than the consensus thinks.’

Issue Date: 12 May 2016