The FTSE 100 broadcaster has often maligned Brexit and the uncertainty it has created for causing its major clients – retail, travel and leisure companies – to hold back on their advertising spend.
But the government is set to spend £100mln over the next two months on a public information advertising campaign ahead of next month’s departure date, encouraging the public to be prepared.
City broker Liberum expects around £30mln of that budget to be spent on TV ads, and they argue ITV, given its dominant position as a public service broadcaster, should be in line to receive a decent chunk of that.
“We see traditional media such as linear TV & Outdoor claiming the majority of the total spend given the need for extensive reach, and thus highlight ITV & JC Decaux as main beneficiaries,” said the analysts in a note to clients.
“For ITV, this will increase the chance of a TV advertising revenue growth guidance beat both in Q3 (-1% to +1%, with the rugby world cup also helping on comps in September) and in Q4 and the FY with advertising spend in October.”
The note added: “Most importantly, given the timing of the announcement, this spending won’t be in guidance for either of the companies.”
ITV shares were up 0.5% to 116.5p on Monday morning, valuing the company at £4.7bn. Shortly before the Brexit vote in 2016, the stock was trading at almost double that.