Pattullo pick ITV upgraded on improved credit profile

British broadcaster ITV has been upgraded by Fitch Ratings in light of the company’s improved credit profile and the progress made in its transformation programme.

Jenna Barnard
Jenna Barnard

ITV’s long-term issuer default rating and senior unsecured rating have been lifted from BB to BB+ and the company has been granted a stable outlook, meaning the rating is not expected to change again in the near future.

The broadcaster’s bonds and stock is owned in a number of UK retail portfolios. John Pattullo and Jenna Barnard hold ITV debt in the £1 billion Henderson Strategic Bond* and £583.94m Henderson Preference & Bond* funds.

In addition, ITV’s equity is owned by Sanjeev Shah’s £2.4 billion Fidelity Special Situations fund*, Derek Stuart’s £1 billion Artemis UK Special Situations fund* and the Majedie UK Focus fund*, managed by James de Uphaugh, Chris Field, Adam Parker and Matthew Smith.

Fitch says: “ITV’s credit profile is much improved with a strong balance sheet, more diversified revenue mix and a core TV business which is performing well in a weak economic environment.”

The ratings agency also cites the progress made in expanding the broadcaster’s non-TV advertising businesses, particularly in content production, as planned in its five-year transformation programme.

ITV’s cyclical exposure to the UK economy is less worrying than previously, Fitch adds, while increased programming commissions and “solid” cost control mean the firm is less vulnerable to a downturn in advertising revenues.

However, Fitch sees structural changes such as the growth of the internet and the digitisation of content as the primary challenge facing the media industry and ITV’s greatest risk of incurring a future downgrade.

* as of February 29