Carolyn McCall is flying high at ITV – so high that the broadcaster and producer may be taken over before she soars too far above the clouds.
One of the likeliest suitors for the maker of TV hits such as Coronation Street and Love Island is Liberty Global, the US cable operator which owns Virgin Media, and which has a 10 per cent stake in ITV.
Speculation has heated up again as Liberty, owned by billionaire investor John Malone, is set to receive a windfall of £11billion cash after selling its European cable operations to Vodafone.
Liberty’s Malone, long seen as a potential bidder for ITV, has also made it clear that after tidying up operations in Europe he wants to concentrate on the UK.
Flying start: Former chief executive of Easyjet, Carolyn McCall has only been at ITV for five months but clearly her talent for focus is paying off
This may include buying content for his cable networks or snapping up another mobile operator.
Who knows which Liberty goes for, but ITV looks a snip at its present £6bn market price. As a trading update yesterday showed, the business is growing faster than expected, on and off screen.
The former chief executive of EasyJet, McCall has been at ITV for only five months but clearly her talent for focus is paying off. External revenues were up by 5 per cent but the golden goose was ITV Studios, where revenues were 11 per cent higher.
As well as new series of old favourites such as Britain’s Got Talent and Love Island, there are many new ones in the pipeline, such as the Vanity Fair drama, from the same producers of Victoria and Poldark, which was ironically such a hit on BBC.
McCall wants to grow ITV Studios into a strong programme-making brand, producing shows for Netflix as well as competing with it.
It’s the right strategy to wean the business off advertising and, so far, is going in the right direction.
Even so, what the City was looking at most closely was the level of net advertising revenue – a good indicator to future growth.
This was 3 per cent higher and ITV is predicting ad sales up for the World Cup.
Analysts are now saying ITV’s shares, which trade on a price earnings multiple of just under ten, should be rerated.
As ITV, Sky, Netflix and others have shown so brilliantly, investment in great content pays off. Having distribution as well is even better.
It’s why Comcast is busy lining up financing for a £45billion all-cash offer for the 21st Century Fox entertainment assets being sold by media tycoon Rupert Murdoch, which would top Disney’s existing £38.5billion all-share deal.
This includes Murdoch’s 39 per cent stake in Sky, and it is quietly confident because of UK regulator concerns over Murdoch’s dominant media presence.
If you compare ITV to international peers such as 21st Century Fox, Vivendi and CBS, it looks undervalued.
With ITV seeing an uplift in advertising revenues, including from the forthcoming World Cup, some suggest shares could shoot up to 265p over the next year or so.
Come fly with me!
Tale of two BTs
This first sentence of BT’s latest strategy update tells you everything that is wrong there: ‘Our strategy will deliver sustainable growth in value by focusing on delivering differentiated customer experiences, investing in integrated network leadership and transforming BT’s operating model.’
Do you know what any of the above means? No, nor do I.
And nor I suspect do investors who saw shares fall 8pc after BT announced another round of job losses and other cuts. Chief executive Gavin Patterson was just as vague about the strategy when we spoke.
That’s the problem with corporate gobbledegook – it clouds the brain.
But buried under the gibberish, Patterson is modernising the business for a full-fibre future: 6,000 new engineers and cyber experts are being hired to join the 4,000 geeks at BT’s research centre.
It has invested billions in super-fast broadband but still needs to replace the copper wires into your homes. It has sports TV and set-top boxes to bring packages of films and other services into your living rooms.
There are two BTs: the legacy fixed-line operator, and the modern data carrier battling it out with Sky.
But we need to be told what the new one is – in normal language.