No recovery at ITV

At least as far as investment bankers Morgan Stanley is concerned any recovery at UK commercial broadcaster ITV is still some way off. They are assuming no recovery in advertising for the rest of this year, and “into 2010” and as a result ITV’s financing problems will mount.

A note to investors from the bank says: “Relatively small adjustments to the projected ad growth rate make a big impact on the numbers. If we assume -15% for ITV Family advertising in 2009, -6% in 2010 and -1% in 2011, the impacts are [that] there would be a net cash outflow of £17m over the three years, meaning that ITV could have insufficient resources to meet its October 2011 cash call without further financing movements. Net debt/EBITDA would be in double digits by 2010.”

“ITV is already in the process of cutting programming spend. It risks moving into the vicious circle of lower advertising, lower programming spend, lower ratings leading to lower advertising revenues and so on. There is the risk as the economic environment remains poor that third-party customers for ITV Content (an £85m EBITA business) will fall away, endangering the relatively defensive programming business as well.”