• Despite fall in revenue the results beat market expectations, sending shares upwards.
• Although online revenue growth was strong, ITV still face considerable competition from the likes of Netflix and Amazon.
• The respectable dividend yield could come under threat with the fall in earnings so we maintain our ‘Hold’ recommendation.

ITV beat market expectations with its interim results this morning. Overall revenue fell 7% to £1.48bn and advertising revenue dropped 5%, but that was actually better than the 6% expected by the market. Strong growth in online revenue, up 18%, was cited as the main reason. Pre-tax profit dropped 16% to £222m and the company admitted it was being affected by the uncertain economic and political environment. The company is due to launch its joint streaming service with the BBC; BritBox, later in the year and the Studios part of the business plans further “Love Island” and “I’m a Celebrity…” series.

The market was clearly pleased when it tuned in for the results today, sending the shares up 7% in early trading, although it must be said they’re still down 33% over the past year. While the growth in online revenue is a positive, as is the launch of BritBox, there is no doubt that ITV faces considerable competition for viewers, from social media to Netflix and Amazon. The dividend yield of 7.1% is very good, however the fall earnings means that cover has dropped a little.

Our View on ITV - Hold

Despite much of the bad news appearing to be in the price already we continue to see the shares as no better than a ‘Hold’.

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