There’s good news and bad news ITV (ITV) on retransmission fees as the Government removes legislation which effectively blocks the company from charging third parties for broadcasting its content but in the same breath suggests this should not happen.

Shares in the free-to-air broadcaster are up 0.4% to 169.5p. As a reminder, retransmission fees, already in place in the US, are essentially all upside for public service broadcasters like ' and ITV (as well as the BBC) because they involve additional revenues at no extra cost.

ITV published a report in 2014 which argued the likes of Sky (SKY) and Virgin Media – owned by majority ITV shareholder Liberty Global (LBYTA:NDQ) – should pay to carry its channels.

Ministers have revealed they will scrap section 73 of the Copyright, Designs and Patents Act as part of a new Digital Economy Bill but says it ‘expects that there will continue to be no net payments between all platform operators and the public service broadcasters for carriage of their licensed channels going forward’.

Despite this ITV says it will press ahead on commercial negotiations with its pay-TV counterparts.

Liberum analyst Ian Whittaker, who rates ITV a 'buy' with a 375p price target says: ‘At first sight, it appears a victory for the pay-tv operators, who did not want to pay such charges, against ITV and others… retransmission revenues were not in our numbers and, while a disappointment, does not impact the key fundamentals of our Buy case.’

Issue Date: 06 Jul 2016