'Downton Abbey' Broadcaster ITV's Stock Flying High

4:00 AM PST 08/26/2014 by Georg Szalai
Nick Briggs/Carnival Film & Television Limited 2013 for MASTERPIECE

The show may not have won an Emmy on Monday, but the company's market value is higher than ever

The stock of U.K. broadcaster ITV, the British home of Downton Abbey and The X Factor, is trading at all-time highs, with analysts citing U.S. acquisitions and U.S.-style retransmission fees that are set to come to the country as key reasons to be bullish on the stock.

Many also cite a recent deal by John Malone's Liberty Global to acquire a 6.4 percent stake in ITV from BSkyB as a driver of the stock. 

BBC hit show Sherlock on Monday night outshone Downton Abbey at the Emmys, taking home three awards and leaving the latter without any wins. But ITV management has said that Downton Abbey is a key contributor to the company's ratings and financial turnaround since CEO Adam Crozier took over a few years ago and emphasized that it has built on its success with other ratings hits. 

After a soft ratings start to the year, which was a drag on ITV shares, the stock has been on the rise in recent weeks. Last week, it quietly hit an all-time high of $3.53 (£2.13) and on Tuesday remained near that mark, giving it a market value of nearly $14 billion.

Analysts have highlighted that by acquiring U.S. TV production firms, such as Teen Wolf producer DiGa Vision, Pawn Stars producer Leftfield Entertainment and Duck Dynasty maker Gurney, ITV has become less reliant on U.K. advertising revenue, which has benefited the stock.

Nomura analyst William Mairs has a "buy" rating on it with a target price of $3.90 (£2.35). "ITV trades at an undemanding price," he said in a recent report. "Given the strong U.K. ad momentum combined with the recent Liberty stake providing a useful floor, we remain buyers."

Plus, he highlighted management's "more upbeat message on the potential of receiving carriage fees for ITV1 from content distributors, mainly BSkyB" similar to the retransmission fees U.S. broadcasters charge pay TV giants.

Starting this weekend, ITV once again will be in the spotlight as the 11th season of The X Factor in Britain is set to launch Saturday night. Simon Cowell will return as a judge. ITV renewed the show for three more years late in 2013. 

Email: Georg.Szalai@THR.com
Twitter: @georgszalai

 

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