Share Watch: ITV seeks to compete online with launch of its own BritBox
Dramatic changes come naturally to commercial TV. In its early days, according to the great Lord Thomson, it represented a "license to print money". Later, in the days when Saturday wrestling, the 'big match' and '3-2-1' held sway, it was a utility.
But there's nothing utilitarian about commercial TV these days, particularly so for the UK's biggest commercial operator, ITV.
The company traces its origins to the merger of Carlton Communications and Granada TV 15 years ago. Today, the London company owns most of the regional licenses in England, Scotland, Wales and Northern Ireland.
It remains a really big business with a market share over 23pc. Its broadcasting and online business generated £2bn (€2.3bn) of group revenues and 65pc of profits.
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Content is key for ITV and it is well ahead of the game. Its production studios generate over half of its revenues from its global footprint of studios in the UK, US, Australia and Europe. This footprint allows ITV to provide content tailored to local markets.
Having acquired the Dutch production company Talpa Media a few years ago and World Productions (producer of 'Line of Duty') last year, ITV faces criticism from some investors over its failure to acquire UK-based Entertainment One; that TV production company was recently snapped up by the US toymaker Hasbro.
Reality shows are also essential business for ITV. It has hit the jackpot with its blockbuster programme 'Love Island', currently in its fifth season and attracting an audience of six million mostly in the important 16-to-34 age bracket. To some the series is a deep pit of vapidity, the embodiment of the dumbing down of TV. To others it is a must-watch programme. Whatever your viewpoint ITV plans adding a winter programme.
Meanwhile, the dramatic changes which bedevil commercial TV abound. ITV is under pressure from internet streaming disruptors such as Netflix and Amazon. Indeed, challenges facing the TV industry have striking similarities to those facing newspapers in that both are threatened by the internet.
Some observers say the rapid growth of streaming could mark the end of traditional TV. They point out that consumers are shifting towards subscriptions and accelerating the decline.
Today, half of UK homes pay for online streaming. The problem of disruptors is not confined to the UK. In the US, intense competition from streaming has forced Disney to set up its own operation with help from its acquisition of 21st Century Fox.
Last week saw ITV launch its answer to Netflix and Amazon in the form of BritBox, a streaming service in conjunction with the BBC. It will feature a mixture of recently broadcast content such as 'Love Island' (if you really feel the need to catch up) and old favourites like 'Prime Suspect' and 'Fawlty Towers'. Some sceptics question the rationale for paying a subscription for content already covered by their TV license.
The BritBox project will not come cheap. This year ITV expects to invest up to £25m (€29m), rising to £40m (€46m) next year.
Despite economic and political uncertainty, ITV performed reasonably well in 2018. Revenue at £3.2bn was up slightly but net profit declined. Its shares were marked down on the day of its results but now trade at 133p, up 30pc from its yearly low. This is still only half its value from five years ago. With a market cap of £5bn, the shares trade at 10 times forward earnings and with a dividend commitment.
ITV has the benefit of a strong balance sheet, a cost-saving programme and a strong studio business. However, the business is in a state of flux, is operating in a decreasing advertising market, and is saddled with high debt.
Pending Brexit and advertising trends, it is best to wait before investing in ITV.
Nothing in this section should be taken as a recommendation, either explicit or implicit, to buy any share mentioned.