MARKET REPORT: Investors tune out of ITV as plan to launch new paid-for streaming platform is panned by the critics
ITV was one of the biggest fallers in the FTSE 100 as investors were left unimpressed by its plans for a new streaming service.
The platform, ITVX, is set to launch in the fourth quarter of this year and will allow subscribers to view hit shows like Trigger Point before they are broadcast on live TV.
There will also be a free option where most of the content will be available to watch with adverts.
Previews: ITVX will allow subscribers to view hit shows, like Spy Among Friends staring Damian Lewis and Guy Pearce (pictured) before they are broadcast live
However, ITV’s shares tumbled 27.5 per cent, or 30.43p, to 80.22p as investors baulked at the strategy to increase spending on content in order to draw in subscribers.
The company is planning to invest just over £1.2billion into content this year, which will rise to £1.35billion from 2023 onwards.
‘Creating hit after hit comes with enormous financial implications. It’s feasible this won’t be the last time ITV has misjudged its budget,’ Hargreaves Lansdown analyst Sophie Lund-Yates said.
The spending news overshadowed a strong set of full-year results, with ITV’s pre-tax profits rising 48 per cent to £480million in 2021 as it raked in record advertising revenues of £1.96billion, a 24 per cent increase on 2020.
Meanwhile, the London Stock Exchange Group surged to the top of the FTSE 100 after a strong set of results sent its shares 9.7 per cent, or 614p, higher to 6984p.
The stock market operator reported a profit of £2.3billion for 2021, up 26.8 per cent year-on-year, while its income rose 6.1 per cent to £6.8billion.
As a result, the company hiked its dividend by 27 per cent to 95p per share. It remained wary of Russian sanctions and the war in Ukraine but flagged that both countries accounted for less than 1pc of its income.
Stock Watch – N Brown
N Brown, the owner of clothing brands Simply Be and Jacamo, sank as its profit growth was hit by rising costs.
The group was expecting earnings of between £93million and £96million for the year to February 26.
However, as a result of inflation, N Brown said it now expected earnings for its current financial year to be closer to £86.5million.
It also said higher freight costs were expected to continue across 2022. The update sent shares tumbling 25 per cent, or 9p, to 27p.
The FTSE 100 slipped 2.6 per cent, or 190.71 points, to 7238.85 while the FTSE 250 fell 3.4 per cent, or 696.12 points, to 20,079.7. Nervousness about the war as well as fears over rising inflation had investors in a sombre mood yesterday.
A key weight on the index was engineering group Melrose, which sank 8.4 per cent, or 11.85p, to 129.9p after it delayed the return of proceeds of several sales to investors as a result of ‘uncertain’ knock-on effects of the war.
The decision came despite the firm swinging to a profit of £197million last year from a £36million loss in 2020, which was ahead of expectations.
Blue-chip housebuilder Taylor Wimpey fell 4.1 per cent, or 5.8p, to 138.55p after unveiling plans for a £150million share buyback.
The news came as the firm’s profits more than doubled to £679.6million in 2021 from £264.4million the previous year while the number of new homes completed jumped 47 per cent to 14,087.
Drinks bottler Coca-Cola HBC slipped 4.3 per cent, or 71p, to 1599.5p after throwing out its full-year guidance as a result of the war.
The FTSE 100 firm, which generated around 20 per cent of its earnings from Russia and Ukraine last year, noted that it was ‘too early to quantify the impact’ of the crisis on its business.
Insurer Admiral was also on the back foot, falling 14.2 per cent, or 418p, to 2540p after its dividend of 187p per share for 2021 disappointed investors despite being a 19 per cent increase on 2020’s payout.
Matters were not helped by the group’s international business, which swung to a loss of £12m from a £9m profit the year before.
Total profits for 2021 rose 26 per cent to £769million. Elsewhere, mid-cap defence group Chemring surged 3.1 per cent, or 10p, to 336.5p after upgrading its guidance.
It expected results for its current year to be ‘slightly ahead’ of market expectations following several recent contract wins including an £8million deal to supply electronic warfare equipment to the Swedish Ministry of Defence.