ITV benefits as Omnicom ends Channel 5 ad deal

ITV's share price rose on Thursday after reports that it will benefit from a decision by US media giant Omnicom to halt further spending on advertising with broadcasting rival Channel 5.

ITV shares hit 180.80p in late afternoon trading, a rise of 2.4% on Wednesday's close.

According to a report in MediaWeek, Omnicom's media trading arm Opera has cancelled media spend of £30 million with Channel 5 until the end of the year and will give it to ITV instead.

The magazine's sources claim the decision was made without any discussion with Channel 5 and follows a year in which the broadcaster has made good strides in attracting an adult audience.

The timing caught Channel 5 off guard as its ownership passes from Northern & Shell's Richard Desmond to Viacom, the US entertainment goliath.

The speculation is that Omnicom's Opera has been canny in managing its relationship with ITV with some kind of volume commitment. It has flatly told its clients that they won't be advertising with Channel 5 until next year but is not said to be re-broking the business.

Channel 5 must be sore because it is the only free-to-air PSB channel currently growing its audience base, reaching 31.8 million people weekly. Some kids brands could find the decision a problem, as Channel 5 has a very good reach in this market.

Beating forecasts

An analyst at Liberum could have also have encouraged ITV shares to rise after he confirmed market intelligence that the broadcaster's advertising revenues were beating forecasts.

ITV shares with the BBC the television rights for football World Cup in Brazil.

Ian Whittaker at Liberum published a 'buy' rating for the shares and predicted an eleventh hour rush for World Cup slots, as advertisers appeal to the football tournament's massive audience.

Whittaker said media buyer feedback suggests that advertising revenues in June for ITV1, which accounts for more than 75% of ITV's total ad revenues, will soar by 24% year-on-year, well ahead of ITV's guidance of 15-20% for June for the group as a whole.

Goldman Sachs has also been studying the broadcaster and has predicted that it is one of two potential takeover targets in Europe, but not in the near future. Most likely this will be a spinoff of the company's content business, the analysts say.