ITV share price:Ofcom hints at possible introduction of retransmission fees

on Dec 15, 2014
Updated: Oct 18, 2019
Listen, Monday, December 15: The UK’s telecommunications regulator today hinted that retransmission fees could be introduced to “maintain and strengthen public service broadcasting” in the country. The watchdog published a consultation on its third review of public service broadcasting (PSB), and said that the introduction of retransmission fees was one of the options for increasing direct financing top roviders, such as ITV Plc (LON:ITV) and BBC. Other options listed by the regulator included “relaxing TV advertising rules or considering new tax breaks to encourage investment”, among others.

ITV has been pushing for the adoption of retransmission fees, which would see pay-TV providers such as Sky Plc (LON:SKY) and Virgin Media charged for the transmission of PSB channels. In September ITV renewed its calls for changes, citing a study by NERA Economic Consulting showing that retransmission payments have contributed significantly to the new “golden age of television” in North America (ITV share price: Broadcaster calls for retransmission payments). Naturally, Sky has opposed any change, arguing that ITV wants the significant benefits of its PSB status while cherry-picking from a fundamentally different US market.

In its review, Ofcom also said that PSBs were performing well despite falls in both programme spend and viewing. Ofcom chief executive officer Ed Richards commented: “The entire TV industry must meet new challenges from an evolving media landscape, which brings risks and uncertainties. But our view is that the public service broadcasters are in a strong position to continue contributing to a successful and innovative sector.”
In today’s trading, ITV shares were marginally up at 204.10p as of 14:06 UTC. At the same time, the Sky share price was 2.4 percent lower at 880.50p. Stocks in both companies have advanced since the start of the year, by 5.2 percent and 4.3 percent, respectively.
According to the Financial Times, the current consensus estimate has it that ITV will outperform the market. The current consensus for Sky suggests that investors should hold their position in the company.

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