Tip for corporate website designers: don\u2019t put pictures of the \u201cboard of directors\u201d under a sign saying \u201cEmmerdale \u2014 please drive carefully through our village\u201d. Even if the company is ITV, the show\u2019s broadcaster. <\/p>\n
What sort of impression does that give? That the entire 12-strong board, down from chairman Andrew Cosslett and chief executive Dame Carolyn McCall, are a sleepy, safety-first bunch that don\u2019t like to be disturbed? Or that somewhere in their ranks there may even lurk a village idiot? Or that this is the sort of company where the world could easily pass them by?<\/p>\n
Seriously, no one needs that sort of visual clue \u2014 and not least if the company actually is ITV. A squint at the ten-year share price chart does the trick for most people \u2014 because, whatever the board\u2019s efforts, it doesn\u2019t make pretty viewing. <\/p>\n
That much has just been driven home by the group\u2019s biggest investor \u2014 Liberty Global \u2014 offloading half its 10 per cent stake to raise \u00a3135 million at a cut-price 69\u00bep. To get shot of it it had to sell at a 6 per cent discount to Tuesday\u2019s close: enough to send the shares down 8.5 per cent to 68p. Worse, the sale was at a fraction of the 185p at which Liberty bought into ITV in 2014. So, just the thing to underline how much the group has atrophied in this Netflix and YouTube age. <\/p>\n
True, at one level, the sale may say more about Liberty Global than ITV<\/a>. Earlier this year its chairman, 84-year-old John Malone, told investors it would raise $500 million to $750 million via asset sales. And, small mercies, it has kept half its ITV stake, rather than flogging the lot. But there is a clear read-across. <\/p>\n Malone, once touted as a bidder for ITV, is far too canny to be selling down if it was on the brink of some value-accretive corporate action. So all bets must be off for now on any deal, including those rumoured talks with Redbird IMI\u2019s All3Media and European production house Banijay about some sort of tie-up with ITV\u2019s prized studios wing \u2014 the one that delivers about half the sales and profits but, on some analyst estimates, is worth more than ITV\u2019s entire \u00a32.56 billion market cap. <\/p>\n And, without a deal, how can ITV unlock that value? McCall, who took charge in January 2018, is well aware of the problem \u2014 as you\u2019d expect from a boss so far paid a total of \u00a322 million. Her operational strategy broadly stacks up too. She spotted that, even if the linear broadcasting wing is profitable and can pull in five million-plus viewers for the likes of I\u2019m a Celebrity and Love Island, the market doesn\u2019t rate it because it\u2019s exposed to the ups and downs of the ad market. <\/p>\n So, she launched the ITVX streaming service, which previous management was far too slow to get off the ground, while building up Studios: home to hits including Mr Bates vs The Post Office and Rivals for Disney. At July\u2019s half-year, these more reliable digital and production revenues made up 63 per cent of the total \u00a31.85 billion sales. She\u2019s also returned \u00a31.4 billion to investors via dividends and buybacks.<\/p>\n Yet, pointing at those figures isn\u2019t enough \u2014 whatever the view of JP Morgan Cazenove analysts that ITV should be trading on \u201c13 times\u201d forecast earnings per share, a multiple that would imply a 108p share price. Like a lot of TV, this is a story that needs action: an event that makes the value in this business unmissable. Of course, the board isn\u2019t sitting on its hands. But investors deserve a fair bit more speed from the village people. <\/p>\n Castles in the air<\/p>\n What price connectivity? As Heathrow keeps telling us, it\u2019s already \u201cthe best-connected airport in the world\u201d. Indeed, as it noted at its nine-month update, \u201cregions and nations across the UK now have direct access to 92 per cent of the global economy\u201d. So, quick question: is it worth spending \u00a349 billion on a third runway to reach the other 8 per cent? <\/p>\n Sure, an extra landing strip would bring higher frequencies and more competition on individual routes, which would be in consumers\u2019 interests. But is that at any price? As the latest figures underline, there\u2019s no way Heathrow can afford to fund this new runway under the present regulations. It\u2019s already got gearing of more than 81 per cent \u2014 net debt of \u00a317.2 billion against a regulatory asset base of \u00a321.1 billion. <\/p>\n How does an indebted business like that pay such an insane sum for a new runway without jacking up landing charges at what is already the world\u2019s most expensive airport? And that\u2019s before the other joys that go with this project, such as the guaranteed gridlock from putting all 12 lanes of the M25 in a tunnel and demolishing 752 homes \u2014 or maybe more, in the view of the locals. <\/p>\n Anyway, all this is a bit of context for the latest from transport secretary Heidi Alexander, who is fast-tracking a review of the Airports National Policy Statement<\/a> in \u201c18 months\u201d, so the government can make a decision on the third runway this parliament. Yes, she had caveats over noise, air quality, net-zero obligations and the project\u2019s contribution to economic growth. <\/p>\n But a big one is affordability. The Civil Aviation Authority is working on some new regulatory formula. But it\u2019s not obvious what magic it can come up with that suddenly makes a \u00a349 billion runway scheme affordable for both Heathrow and its airline passengers. This project looks a long way from take-off. <\/p>\n Cutting edge dulled<\/p>\n