Has ITV found an unlikely friend in Brexit?

ITV has often blamed Brexit for holding back ad revenues, but the government’s £100mln splurge on the ‘Get ready for Brexit’ campaign could help the broadcaster to beat full-year expectations

The campaign was launched earlier today and will run for two months

Brexit could actually help ITV PLC (LON:ITV) to top expectations with its full-year results, according to analysts at Liberum.

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.

READ: ITV to show more live La Liga matches this season

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.

Quick facts: ITV PLC

Price: 146 GBX

Market: AIM
Market Cap: £5.88 billion

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