ITV outlook likely to worsen, analysts say

Shares dropped from FTSE 100 on Wednesday

LONDON -- ITV's fall from the FTSE 100 this week is yet another low point for Britain's leading commercial broadcaster, which is trading at 40% of its value year ago. And analysts say the outlook will likely get worse.

ITV's shares on Wednesday were dropped from the quarterly-published list of the U.K.'s top 100 stocks, which are rated by market capital, leaving satcaster BSkyB the only television player in Britain's Premier League of stocks. The valuation was made when the shares were trading at 46.5 pence (81 cents) after trading at 1.12 pounds this time last year.

A spokeswoman for ITV executive chairman Michael Grade declined comment on the demotion beyond saying that it "was a fact of life."

"We don't comment on our share price. It is what it is. Our aspiration is to deliver the turnaround strategy and that is what we are focused on," she said.

But analysts said that the broadcaster's problems have more to do with its long-term outlook, than the "technical" fallout from the FTSE drop.

"The technical fallout is that some funds only track the FTSE 100 firms and ITV stock won't be part of that anymore, but its FTSE position doesn't make any difference to the underlying operation of the business," said one London-based analyst for an investment bank who tracks ITV stock.

"It's a prestige thing that makes newspaper headlines, but companies go in and out of the FTSE 100 every quarter. The bigger problem for ITV is that its overall sector is poor," he added.

Most analysts have a sell recommendation on the stock, with some forecasting a price horizon as low as 28 pence in a recent investment note.

"We believe that ITV's share price has been supported by consolidation conjecture," UBS analyst Daniel Kerven said in a note published at the start of the week. "Should these recede, it is vulnerable."
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