ITV’s streaming own goal could lead to takeover trouble

Share prices all over the world are tumbling are investors weigh the consequences of Russia’s invasion of Ukraine but ITV’s recent calamitous drop seems all of its own making.

Despite producing stellar 2021 results last week – Total revenue up 24% to reach £3.4bn with both programme sales and advertising performing well – the shares fell nearly 30% the next day and are still falling, valuing the (mostly) free to air broadcaster at around £2.9bn, way down on the pre-pandemic £4bn or so.

The reason? ITV said it was planning to take on the streaming big boys – headed by Netflix and Disney – by investing more than £1bn a year on content for its revamped streaming offering ITVX. Investors took flight, worried that ITV would join the serried ranks of other streamers who stubbornly fail to make money from such subscription services.

Astonishing that CEO Carolyn McCall, hitherto seen as the ultimate safe pair of hands, and her team didn’t see this coming. Another sign, if you like, that too much digital enthusiasm can get you into serious trouble.

Netflix will doubtless continue to prosper – it was first to do streaming properly and has buckets of content – while Disney is sucking in subscribers because of keen pricing and kids nagging parents to get the latest film. Amazon Prime can continue to do what it likes just because it’s Amazon. But ITV?

ITV has lots of content already of course but will people happily pay for something that used to be free? ITVX is free if you watch the ads, you have to pay for it if you don’t. So it’s not the most straightforward sell. Certainly not the firmest foundation to support a massively increased programme budget.

At some stage the streaming servicves outside Netflix and Disney – and Apple and Amazon which have limitless funds – will have to merge or otherwise combine. ITV could, unwittingly, have made itself a prime target for one of them.

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