ITV’s trading update for the 9 months to 30 September 2016 shows total external revenue growing again, but as analysts had expected, the outlook for the rest of the year is for a weaker TV advertising market. The shares moved slightly down on the news this morning.
George Salmon, Equity Analyst at Hargreaves Lansdown:
"Advertising spending falls under the discretionary category for most businesses, so it tends to wax and wane with the fortunes of the wider economy. While ITV has made strides in recent times to make and sell more of its own content, thus reducing its exposure to this trend, the group is still heavily dependent on selling commercial slots to generate its revenue.
Given the current economic uncertainty, it may not be much of a surprise to see the group’s customers are pulling their horns in, but it is still not good news for the group. This has seen the shares slide in recent months.
However, for the time being ITV remains the prime place to advertise on a national scale. Coronation Street’s status as a national treasure isn’t endangered by a weaker economy. The challenge for the group now is to retain this premier position as Netflix and others grow in the on-demand sphere. Viewing habits are changing, and ITV will have to change with them."
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