ITV share price rallies as Ofcom renews Channel 3 licence

Company to operate Channel 3 in England and Wales for 10 more years

ITV share price rallies as Ofcom renews Channel 3 licence, Tuesday, February 11: ITV Plc’s

(LON:ITV) share price has seen significant gains, after the UK communication watchdog Ofcom announced today that it has renewed the licences of Channel 3 (ITV) and Channel 5 for another 10 years from January 1, 2015. Under the new licences, Channel 3 will continue to be operated by ITV, STV and UTV, while Richard Desmond’s Channel 5 has held on to its broadcasting rights.

In today’s trading, ITV shares were up nearly two percent at 205p as of 12:50 UTC. UTV Media Plc (LON:UTV) and STV Group Plc (LON:STVG) saw even bigger gains, rising 2.6 percent to 248.75p and five percent to 342.28p, respectively.

Channel 3 licence

ITV will hold the rights to broadcast Channel 3 in England, Wales and the Channel Islands for ten more years, Ofcom announced today in a statement. STV and UTV will have the broadcasting rights for Scotland and Northern Ireland respectively.

The watchdog explained that the financial terms of the licences will comprise two different kinds of payment - a fixed annual cash payment and a percentage of the licensee's qualifying revenue. Ofcom set out the methodology to determine financial terms for each licence in July.

In today’s statement, the watchdog said: “Licensees need to accept the financial terms determined by Ofcom in order for the licence renewal to take effect. We will update our website with details of which licensees accepted and rejected the financial terms.”

Analyst Liberum Capital pointed out that the absence of a rise in fees was a “mild positive” for ITV investors.

While there has been no indication so far from ITV whether it will accept Ofcom’s terms, STV and UTV both issued statements today, welcoming the news.

STV’s chief executive officer Rob Woodward said that the company had agreed “the financial terms and programming commitments that underpin the licences”.

"A key aspect of the new terms of the licences is our continued commitment to invest in public service content, particularly over 2014 as we approach the referendum on independence,” he added.

UTV’s CEO commented: "As a successful regional broadcaster, we are totally committed to providing our audience with high quality public service programming in the future - as we have for more than 50 years."

As of 13:48 UTC buy ITV shares at 205.50p

As of 13:48 UTC sell ITV shares at 205.30p

As of 13:31 UTC buy STV shares at 343.0p

As of 13:318 UTC sell STV shares at 337.00p

As of 12:10 UTC buy UTV shares at 250.00p

As of 12:10 UTC sell UTV shares at 247.25p

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