ITV increases US exposure

ITV will issue a management update in just over a week, after acquiring US firm Leftfield Entertainment.

This latest acquisition for ITV will see the company pay $360 million up front for the US entertainment group Leftfield, with a balance up to $800 million to be paid depending on its success over the next three years. This increased exposure is the third time in recent years that ITV has directly increased its exposure to the US markets.

The UK free-to-view market has recently been shaken up by the news that Viacom has acquired Channel 5 from Richard Desmond. This would give the US television producer direct access to the UK market, and possibly the first steps towards broader European exposure.

The lines between satellite, terrestrial and broadband have become increasingly blurred as consumer demographics have moved away from watching live TV, towards online and on demand. A number of the large players have been reorganising themselves. BT has launched a number of sports channels, Vodafone is acquiring Deutsche Cable and now Viacom’s acquisition of Channel 5. This all points towards a sector that will offer volatility.

The last two and a half years have been very rewarding for shareholders in ITV as the share price has almost tripled. The first quarter of 2014 has seen a little more consolidation as the price is 8p lower on the year and 10% of its year highs. Even with the uncertainty that hangs over this sector ITV is well placed to continue generating cash, and subsequently its future looks a little more secured. As long as the share can keep closing above the 173p lows we would anticipate a retest of the year highs of 210p.

ITV chart

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