02 April 2023
By Maynard Paton
I have recorded another podcast with my good friend Roland Head. This time we talked about Roland’s shareholding in ITV, which currently yields 6% for his income portfolio. We discussed the broadcaster’s business strategy, growth opportunities, industry challenges and lowly valuation:
We cover:
- ITV’s recent results, the 6% yield and Roland’s portfolio purchases.
- The bull case for ITV, being a UK ‘TV champion’ and consistent viewing habits.
- ITV’s financial history, dividends being skipped and the near-term outlook for advertising.
- The growth of ITV Studios, international production opportunities and 26 overseas versions of Love Island.
- The move towards higher quality dramas, extra scripted content and further sales to streaming services.
- The structural decline of television advertising, and reduced conventional viewing versus rising streaming hours.
- ITV’s digital advertising, the Planet V platform and potential ‘scalable’ economics.
- The cost of advertising on ITV, with regional options starting at just £6.
- ITV’s pension-deficit payments, upfront production costs and regular exceptional items.
- ITV’s operating margin, return on capital employed and ITV Studios appearing undervalued.
- Capitalising programme costs, ITV3 repeats from 1976 and the hidden value of the back catalogue.
- Hasbro buying Entertainment One during 2019 suggesting ITV shares are undervalued.
- ITV’s revenue per employee, debt and past special dividends.
- Chief exec Dame Carolyn McCall, her business plan and the poor disclosure of director options.
- Britbox, airtime-for-equity investments and System1 advert testing.
- Our concluding thoughts on ITV’s strategy, valuation and potential.
Extra links:
- ITV investor proposition
- ITV airtime costs
- Man About The House (1976)
- Roland Head’s dividend website
Happy listening!
Maynard Paton
PS: The episode was recorded on 29 March 2023.
Disclosure: Maynard own shares in System1.
