Super Stock: why I think the picture is improving at ITV

UK commercial television heavyweight ITV (LON:ITV) is often seen as a potential takeover candidate.

In recent years it has also often been described as a serial underperformer, battling structural headwinds from changing market conditions.

I think this view is too simplistic, overlooking the strategic progress the company has made and its impressive reach among UK viewers.

After a multi-year period of transition, I think the additional investment made in content production and digital operations should soon start to bear fruit.

I’m also optimistic that more favourable industry conditions should support a return to growth over the next 12 months. Against this backdrop, I think the stock’s modest valuation, high yield could provide an appealing entry point for investors.

Full disclosure: I own shares in ITV.

Summary

Pros:

Modest valuation with improving outlookStrong quality metrics and large share of UK marketOpportunity for significant growth in US content production marketTakeover potential, with ITV Studios potentially valued in excess of current market capCons:

Terrestrial broadcast television is in decline and ITV must keep hold of its viewers as they move onlineStreamers present a competitive threat that didn’t exist...