EU vote slams ITV shares again

UK media stocks fell heavily again on Monday morning as the repercussions of the country’s decision to exit the European Union sank in, with ITV amongst those worst hit.

Claire Enders

The commercial operator, which includes ITV1, ITV2 and ITV Encore in the UK and holds stakes in an array of productions outfits, saw its share price drop by over 9% by mid-morning.

Its shares had already plummeted by 19% on Friday, leading to CEO Adam Crozier writing to staff to reassure them about the company’s future.

Fears over an advertising slump in the UK fuelled the sell-off with some analysts, including Claire Enders of Enders Analysis, telling C21 that the company’s position as a gateway into Europe would reduce acquisition interest from US majors.

However, others, including Ian Whittaker of Liberum Capital, said the devaluation of the UK’s currency could make the company an attractive target for a US firm. Sterling has fallen by around 12% against the US dollar since Wednesday.

Other UK-based operators were also hit as traders reassessed the market following Thursday’s referendum, which saw 52% of voters choosing to leave the EU.

Sky, which has operations in Ireland, Austria, Germany and Italy as well as the UK, was down by more than 3% by mid-morning, pay TV rival and telecoms giants BT was down by over 4% and UK-based transatlantic distributor Entertainment One had slipped 3.45%.

US firms with interests in the UK did not escape Thursday’s vote unscathed, with Fox finishing Friday down 7.7%, followed by Discovery (-7.2%), Viacom (-5.6%), Sony (-4.8%), Time Warner (-3.2%), CBS (-3.8%), Disney (-3.3%), Comcast (-2.1%) and Netflix (-3.5%).

This morning, European outfits continued to feel the effects, with Scandinavian operator Modern Times Group down 6.44% and Central European Media Enterprises, which is based in Bermuda but operates across Eastern Europe, down almost 10%. ProSiebenSat.1 fell 1.4% and Luxembourg-based RTL Group 1.39%.

The creative sector was worth around £84bn (US$112bn) to the UK in 2014, according to the Creative Industries Federation, with 57% of its exports heading to Europe.

The CIF said the sector had been growing at twice the rate of the UK economy prior to the referendum, with UK industry figures now fearing such growth could stall.