News that ITV PLC (LON:ITV) boss Carolyn McCall has appointed her former colleague at easyJet PLC (LON:EZY) as chief financial officer of the company has been generally well-received by analysts.
Chris Kennedy, who was CFO at easyJet from 2010 until 2015 when McCall was in charge, is due to join ITV in February.
He joins the company from Micro Focus International PLC (LON:MCO), where he been CFO since January.
Two months into his short stint at Micro Focus, the software firm lost nearly half its market value as it announced the departure of chief executive Chris Hsu and cut its revenue outlook due to problems integrating assets from Hewlett Packard Enterprise (HPE.N).
READ: ITV boss Carolyn McCall poaches former easyJet colleague as CFO
But AJ Bell investment director Russ Mould pointed out that the profit warning happened shortly into Kennedy’s tenure at Micro Focus, so blaming him would “equate to shooting the messenger”.
“Instead shareholders may be enthused by his previous experience at technology firm ARM and EasyJet where he, alongside his new boss Carolyn McCall, presided over strong returns for shareholders,” Mould said.
During his time at easyJet, the share price quadrupled, dividend payments were introduced and the company joined the FTSE 100.
At ARM Holdings, where he was CFO from 2015 to 2017, he helped lead the £24bn sale of the chip maker to SoftBank in 2016.
Meanwhile, Micro Focus on Monday said full year constant currency revenue would reach the top end of the guidance range, which was for a fall of 6-9% on last year’s revenue, after improved trading in the second half.
READ: Micro Focus raises revenue guidance for year just ended
ITV open to a sale?
Analysts at Liberum said ITV’s reference to Kennedy as a “key player” in selling ARM to Softbank may be a suggestion that the broadcaster could consider a disposal.
“This may be just filler for the statement but it may also be a flag that ITV is open to a sale.”
Liberum had two other thoughts on the appointment: McCall took on someone she already knows and has presumably has worked well with; and another ITV connection is that Kennedy is a non-executive director at Whitbread, whose chairman, Adam Crozier, is the former chief executive of ITV.
The broker maintained a ‘buy’ rating on the stock.
ShoreCap views CFO appointment as positive
Shore Capital also reiterated a ‘buy’ recommendation on ITV, saying it views the appointment as positive.
“Chris Kennedy has an impressive CV / skillset and the fact that he and Carolyn McCall have worked together successfully in the past bodes well for his ability to add value to the process of re-energising the group’s growth potential. More broadly, we remain positive on ITV’s medium-term attractions,” ShoreCap said.
“These include: (a) its unrivalled ability to deliver a mass market commercial audience to advertisers via a highly trusted medium; (b) the growing scale and commercial value of its international content portfolio (9k+ hours produced per annum, 40k hour library, produces / sells in 11 / 196 countries); (c) strong cash generation (providing firepower for acquisitions, dividend growth and de-leveraging an already modestly-geared balance sheet), and; (d) its value as a strategic asset within a consolidating industry.
“The last of these points reflects our view that media, tech and telecom companies will continue to compete for proprietary content - witness the battle for / Comcast’s eventual acquisition of Sky ...”
McCall focuses on so-called 'strategy refresh'
In an effort to address the competition ITV is facing from the likes of Netflix and Amazon, McCall is focusing her efforts on beefing up the production of the company’s own content and growing the direct-to-consumer business.
Earlier this year, the group also announced that it had joined major Hollywood studios, including Disney and Fox to back a new video streaming service for mobile phones.
Under McCall’s so-called “strategy refresh”, unveiled in July, ITV will invest £60mln over the next three years but aims to deliver up to £40mln in cost savings over the period.
Investors will be keen to hear any updates on the progress of the strategy when the group reports its third-quarter results on Wednesday.
ITV produces hit shows include Love Island, Victoria and I'm a Celebrity ... Get Me out of Here.