World Cup may boost ITV sales
AFTER a buoyant week’s trading which saw it jump nearly 2pc, the Footsie took a well-deserved pause for breath with the US Independence Day holiday, and the attractions of the tennis at Wimbledon and football’s World Cup quarter finals taking priority.
Despite England’s early exit from the tournament in Brazil, the prospect of some mouthwatering weekend games made up for the disappointment, and commercial broadcaster ITV has not seemed to suffer too much from the blow.
Indeed the TV firm – which is sharing World Cup coverage with the BBC – saw its shares get a boost from a note by broker UBS, which returned the stock to a buy rating after a recent pull back, citing a compelling valuation. Interestingly, the broker also raised the possibility that the 7.5pc stake that satellite broadcast rival BSkyB still holds in ITV could be placed in the market or sold to a strategic investor.
The BSkyB holding is the rump of a 17.9pc stake bought in a surprise move in November 2006 to block a potential takeover of ITV by the cable media company NTL, now part of Virgin Media.
BSkyB sold a 10.4pc stake in ITV in February 2010 for £196m, or 48.5p a share, making a loss of around £350m on its original investment. However, with the stock now trading at 183.8p, up 0.1p on the day, the remaining holding could more than make this up.
Sky said it would retain its remaining holding for the medium term and remain a ‘committed shareholder’.
However UBS argues that there is potential for BSkyB to sell the remaining stake as part of its plan to create Sky Europe, given the higher gearing that the satellite TV group would be taking on. The broker thinks it is also possible that BSkyB might instead transfer the shares to its US parent Fox as part of the deal which will see it acquire its stakes in Sky Deutschland and Sky Italia to form Sky Europe.
But UBS thinks this would also be viewed positively by the market as the ITV stake could then be seen as a strategic holding.
ITV will report first-half results at the end of July, with UBS forecasting revenue growth of 6.6pc driven by a World Cup advertising boost, although it thinks England’s exit is likely to mean it is hard for the group to exceed this level.
With US markets shut after a strong week in which the US benchmark Dow Jones Industrial Average ended above the 17,000 level for the first time, the FTSE 100 index just drifted higher, closing up 0.84 points at 6866.05.
The FTSE 250 index remained strong, however, ending 21.2 points higher at 16050.16.
A fall back by heavyweight mining stocks was the main drag on the blue chip Footsie, with the sector giving back some of the gains made earlier in the week following robust economic data from top metals consumer China. Among the mining fallers, Rio Tinto shed 10.5p at 3287p, and Anglo American lost 4p at 1521p.
But on the upside, budget airline easyJet soared higher, adding 13p to 1361p to recover from recent falls as it reported strong June passenger traffic. Fellow blue chip International Consoli
dated Airlines also moved higher, gaining 2.4p at 367.6p after the British Airways owner announced robust passenger numbers on Thursday.
Further down the food chain, recruitment agency Staffline – whose brands include Select Appointments – jumped 54p higher to 972p after it reported upbeat trading in the six months to June and said it was on track to hit its first-half earnings targets.
Among resource plays, North River Resources jumped 20pc, or 0.1p higher to 0.6p after it secured equity funding of up to $12m which will be used to re-open its lead in a zinc mine in Namibia and grow the business via acquisitions.
Fellow mining group Hunter Resources also attracted strong attention, with the stock soaring after it completed a reverse takeover of Peru-focused Gold Hunter.
Shares in Hunter, which had been suspended from trading at 0.175p since December, remained steady at 1.82p. As part of the reverse takeover, the firm raised £925,000 through a placing of new shares at 1.5p each.
And shares in Chariot Oil nudged up after it revealed it had brought in a big-hitting partner in the form of Australia’s Woodside Petroleum for its Rabat Deep well off the coast of Morocco. Chariot shares gained 0.62p at 19.5p. ÷ PROPERTY developer Formation Group received a boost after a firm in it which owns a near 37pc stake was paid £18.4m owed to it by builder Redrow for London’s Aldgate East development. Of the payment to JV Finance Ventures, Formation expects to get £6.8m, having already had £1.6m. It will use it to fund purchases of development property, or as working capital. By the close yesterday, Formation shares had jumped 13.8pc, or 0.2p, to 1.65p. Read the market latest updated five times a day at: www.thisismoney.co.uk/markets