Market Report: ITV a turn-off after doubts over its sporting summer

Toby Green
Thursday 16 February 2012 01:00

Armchair sports fans have a bumper summer to look forward to, and investors in ITV have been licking their lips in anticipation. The broadcaster – or so the theory goes – is expected to get a boost from both Euro 2012 and the Olympic Games thanks to companies upping their spending on advertising.

Yet not everyone believes it will be that simple. Although some have claimed ITV will benefit from advertisers wanting to have their brands associated with the Olympics, HSBC's Dan Graham warned that – with only BBC having the television rights – he was "sceptical that [it] will provide a significant boost".

In addition, he argued that, with mainly male viewers drawn to the European Championships, this demographic "may have the effect of crowding out other advertisers". The analyst also pointed out that ITV has the rights to show two of England's group games but will not broadcast any of the Three Lions' knock-out matches unless they reach the final – although, given the team's recent record in tournaments, this may not have been a bad move.

Going on to claim that the the issue of viewers increasingly watching shows over the internet was being underestimated, while adding that economic data suggests 2012 could be "a down-year for TV advertising", the analyst decided to reiterate his "underweight" recommendation.

Mr Graham was not the only bearish voice on ITV yesterday. Peel Hunt's Patrick Yau removed his "buy" advice after its recent strong run and Deutsche Bank's analysts did the same, saying that although the sector tended to perform well in the early stages of a market, "we think we're now entering the underperformance phase". In response, the group ended up as one of the top-tier index's worst performers, sliding 1.2p to 77.3p.

It was another session in which the FTSE 100 hovered around the 5,900 point mark, eventually closing 7.71 points weaker at 5,892.16. Initial signs were promising, thanks partly to China saying it would continue to invest in the eurozone, although fears over Greece yet again dampened investors' enthusiasm.

Nonetheless, Barclays was lifted 6.75p to 241.65p after France's BNP Paribas beat expectations with its results while Barclay's analysts said it was one of their favourite banking stocks.

Tate & Lyle was one of the strongest risers, advancing 21p to 716.5p to continue a rally in which it has added nearly 7 per cent over the past four days. The move prompted some traders to wonder whether punters were buying in because the sugar group has in the past been touted as a possible bid target, although they admitted there were no signs such rumours were doing the rounds again.

Anglo American slipped 82p to 2,690p after its takeover hopes were dampened. The miner has been helped recently by vague rumours it could be a target for Xstrata (down 4.5p to 1,179.5p) and Glencore (down 1.55p to 422p) after they merge or BHP Billiton (down 18p to 2,054p), but Citigroup said now was a good time to bank profits as an approach was "not something we expect in the near term".

AstraZeneca ended up at the bottom of the Footsie, falling 119.5p to 2,898p after trading ex-dividend. BP was another one of those losing their payout attraction and the energy giant retreated 7.4p to 487.4p, despite oil prices rising amid confusion over whether Iran had halted supplies to a number of European countries.

Down on the FTSE 250, Inmarsat climbed 7.3p to 469.2p even though the Federal Communications Commission announced on Tuesday it would withdraw permission for its partner LightSquared's plans to build a high-speed wireless network across the US. However, with the satellite telecoms firm's share price having dropped a third in the past year, many were arguing the announcement was already priced in.

There was some disappointing news for those who were hoping Tui AG will soon buy out the rest of Tui Travel it does not already own, as the German group said that it had no plans for any such takeover move. This was despite Tui AG nearing a disposal of its stake in the shipping line Hapag-Lloyd, which many believe would be the catalyst for a bid. As a result, the tour operator crept down 0.5p to 204.8p.

With the one-year anniversary of the start of the FSA's investigation into its sales practices a matter of weeks ago, CPP equalled its all-time low. The small-cap identity theft protection group slumped 13.75p, or 11.58 per cent, to 105p on the news that Barclaycard will not be renewing its contract, with Peel Hunt's Henry Carver warning that the "risk of further business partners ceasing their relationship... remains very high".

Elsewhere, Blinkx spurted up another 14.33 per cent to 89.75p after the video search engine confirmed it had signed a tie-up with US giant AOL.

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