ITV plc (LON:ITV) was the biggest FTSE 100 faller in morning trading on Thursday after Bank of America Merrill Lynch downgraded its rating for the commercial broadcaster in a bearish review of European TV networks.
The US bank cut its stance for the FTSE 100-listed firm to ‘underperform’ from 'buy' and slashed its price target to 110p from 210p, sending its shares 6.3% lower to 128.60p.
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The BofML analysts said the key drivers in its cautious view are a quicker linear sector decline, with TV losing advertising market share, leading broadcasters to increase their investments in online and diversification.
They noted that TV consumption is declining by 8% year-on-year among "digital natives", who by 2020 they forecast will represent around 50% of the European labour force., with the UK and Germany at the forefront of this disruption.
The analysts said: "ITV's on-screen performance has been very strong in 2018 with audience share up 180 basis points to 23.3%. However, given the discussed fall in TV viewing, ITV absolute viewing (in hours/minutes) itself is just stable.
"Similarly to other broadcasters, ITV is suffering from rapid ageing in its viewer base. In 2018, viewing on adults aged 15-24 declined 15% for example, despite the success of Love Island."
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