ITV will report back on recent trading next Wednesday as it faces investigations into the £1.6 billion deal to sell its media and entertainment arm to Sky after the Culture Secretary stepped in on public interest concerns.
Lisa Nandy formally intervened in a move triggering probes by the Competition and Markets Authority (CMA) and regulator Ofcom, with a deadline to report back to her on the impact of the deal on media plurality in the UK and free speech by January 27.
The group behind hit shows such as I’m A Celebrity… Get Me Out Of Here will report latest quarterly figures as questions swirl over what the scrutiny could mean for the deal and whether it could lead to delays in completing the tie-up.
Russ Mould, AJ Bell investment director, said: “ITV is hoping to change the channel and start a new season with a fresh cast by selling off its broadcast business and concentrating on TV production.
“This will remove its reliance on advertising spend, which is heavily linked to the ups and downs of the economy and has an outsized impact on investor sentiment.”
But he said Ms Nandy’s intervention has “upset the applecart”.
He added: “At the very least this could delay any deal from getting across the line.
“Management will be expected to address concerns that this might scupper its shift in strategy and what it might do if the deal ends up being blocked.”
Ms Nandy will also bring forward new streaming legislation in view of her “specific concerns” over the tie-up to ensure the public interest test can apply to on-demand programmes as well as broadcasting.
ITV struck a deal in July to sell its media and entertainment division to Sky, in a move which would create a major competitor to the global streaming giants.
The sale includes ITV’s terrestrial TV channels and streaming service ITVX but does not include its production arm, ITV Studios, which makes shows including I’m A Celebrity and popular dramas such as Mr Bates Vs The Post Office.
The group’s update on Wednesday will be looked to for signs of a pick up in revenues and profits after ITV said its performance would be weighted to the second half due to scheduling of shows and licensing deals.
But it cautioned in July that advertising revenues were set to fall around 5% year-on-year in the third quarter due to macro-economic headwinds.
This comes despite a boost from the World Cup in July, which helped advertising revenues lift 3% in the previous three months.
In its first half, ITV saw pre-tax profits increase by 16% to £78 million as total group revenues rose 2% to £1.89 billion.
