BUSINESS LIVE: BoE base charge choice; ITV eyes advert market restoration

ITV saw revenue across its production arm slump by 16 per cent in the first quarter as it continues to suffer the consequences of last year’s US writers’ and actors’ strikes.

But total advertising revenue improved in first quarter and the broadcaster told investors on Thursday it expects further growth over the next three months, with sales set to be supercharged by this summer’s European Football Championships.

The group, which is behind the hit shows Mr Bates Vs The Post Office and Love Island, said ITV Studios’ revenues fell to £382million in the three months to 31 March, down from £457million a year earlier.

London-listed stocks are treading water in early trading as investors turn cautious ahead of the Bank of England’s interest rate decision at midday.

The pound has slipped against the US dollar and the 10-year gilt yield is at 4.155 per cent ahead of the decision.

The focus will be on whether policymakers deliver any groundwork for loosening policy. Markets are currently pricing in a 50-50 chance of a June rate cut, and have priced in a cut in August.

IMI is up jumped 1.1 per cent after the specialised engineering firm confirmed its full-year guidance.

BAE Systems has logged marginal gains, rising 0.1 per cent after the defence firm said it was on track to meet guidance for higher earnings and forecast a ‘further positive momentum’.

3i Group is down 3.4 per cnet after posting full-year results.

A company controlled by millionaire hedge fund boss Sir Paul Marshall has lost a legal battle with South Africa over £34million of silver rescued from a Second World War shipwreck.

The UK’s Supreme Court sided with the government in Pretoria which argued it did not owe Marshall’s salvage company payment for finding the treasure in the Indian Ocean.

Adam Vettese, analyst at eToro:

‘Even with overall revenue down, it seems the message is not to panic as most of ITV’s releases are weighted to H2 and the Euros are coming up in the summer which will give a much needed boost to the coffers in terms of viewer numbers and in turn advertising revenue.

‘Investors may be a little wary though as the firm heavily relies on this pipeline of shows to offset this sluggish start to the year, hampered by the US writers’ and actors’ strikes.

‘More and more we consume our viewing content on streaming services online and ITV has made some marked improvements in this area with ITVX also a bright spot with growth in online ad revenue there.

‘ITV says the 2026 KPIs are still on track and this was enough to give the shares a boost back in March, despite a dip in revenue. The question is at what point do they need to actually deliver in order for investors to keep the faith? Shares are up 20% this year and have started positively this morning, piling on the pressure for the next update.’

Airline stocks flew as the industry bounced back after a brief sell-off fuelled by concern over lower summer prices.

British Airways owner IAG rose 3.7 per cent, or 6.6p, to 184p while Easyjet added 2.9 per cent, or 14.6p, to 524.8p and Wizz Air increased 5.3 per cent, or 110p, to 2192p.

The gains came a day after Ryanair boss Michael O’Leary warned that ticket prices were likely to rise by less this summer than previously thought.

The industry continues to rebound following the pandemic when lockdowns brought travel to a standstill.

Apollo-backed Concord has annoucned it will not improve on its $1.25 a share offer for Hipgnosis Songs Fund, days after Blackstone outbid it for the music rights owner of artists such as Shakira and Red Hot Chili Peppers.

The $1.51billion offer from Nashville-based Concord was its second proposal for the music rights investor as it battled Blackstone for rights to more than 65,000 songs, including tracks by Blondie and Neil Young.

Blackstone, the world’s largest private equity firm, had hiked its offer to $1.30 per share or about $1.57billion in April, above Concord’s bid to win Hipgnosis’s board backing for the deal.

Concord is indirectly controlled by Alchemy Copyrights, which acquired music investor and Hipgnosis’s peer Round Hill Music last year.

John Moore, senior investment manager at RBC Brewin Dolphin:

‘Yesterday’s announcement of another rejected bid for Wood was an interesting set up for today’s trading update – particularly in the context of previous private equity bids and shareholder unrest.

‘What unites recent events surrounding the company is the belief that a smaller, slimmed down structure is what will help Wood achieve its full potential.

‘Today’s update shows some progress in that direction, and the management team is patiently trying to work that out for the company to make sure it is maximising value – while other parties see speedier change as critical.

‘As ever, the truth is likely to be somewhere in the middle. Estimates point to an improving earnings picture and Wood’s simplification programme is uncovering savings, but there is more that could be done – regardless of where the company’s future lies.’

Millions of UK consumers are in the dark over a mystery firm being probed by the City watchdog because of rules that prevent it being named, MPs were told yesterday.

Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), revealed the investigation was under way as he defended proposals to lift the veil of secrecy.

Rathi is at war with ministers, including Chancellor Jeremy Hunt, and the financial sector over plans to make it easier for the FCA to name companies it is investigating.

Aarin Chiekrie, equity analyst, Hargreaves Lansdown:

‘There were no big surprises from BAE Systems in today’s update. Defence spending remains high across the group’s sectors and key markets. Many governments are even expected to continue raising their defence budgets amid escalating global tensions.

‘The recent passing of an additional aid package from the US to Ukraine, and the commitment by the UK to grow its defence spend to 2.5% of GDP by 2030 should build further positive momentum for the group, as it looks set to capture a good chunk of this extra spending.

‘The orders placed with BAE are typically long-cycle too, spread over several years, so it gives the group multi-year revenue visibility. An enviable asset to have in uncertain times.

‘That’s led BAE to reaffirm all of its full-year guidance, which calls for sales and underlying operating profits to grow by 10-12% and 11-13% respectively. These growth figures are being boosted by the group’s acquisition of Ball Aerospace which closed back in February this year. The integration of the business is going well, with the newly renamed business, Space & Mission Systems, already securing a number of key contacts.

‘The current £1.5bn three-year share buyback programme is moving full steam ahead, now 90% complete after less than two years. And thanks to impressive cash generation, it’s set to be followed up by another three-year buyback programme of the same size, putting extra cash back in shareholders’ pockets.’

BAE Systems expectst o meet guidance for higher earnings this year and has forecast ‘further positive momentum’ from a recent Government commitment to raise defence spending.

The FTSE 100 group’s order book, like that of many western defence companies, has swelled over the last two years as governments have reacted to heightened geopolitical risk in the wake of the war in Ukraine and amid growing tensions with China.

Britain’s biggest military contractor said it was sticking to forecasts given in February for its earnings per share to grow 6 to 8 per cent in 2024 on revenues 10 to 12 per cent higher.

It said it would benefit from the recent passing of the US supplemental aid package to Ukraine and the commitment Britain made in April to spend 2.5 per cent of GDP a year by 2030.

‘With our global presence and wide portfolio of high-end technologies and services, any further expansion of the current AUKUS programme would enhance our long-term opportunity pipeline,’ the company said in a statement ahead of its annual general meeting later today.

ITV expects the struggling advertising market to improve in the second quarter, with revenues rebounding by around 12 per cent in the second quarter – four times the level achieved in the first.

The broadcaster expects ad sales to be boosted by the Euros football championship which kicks off in June.

ITV, which broadcast Mr Bates vs The Post Office in January, on Thursday reported a 6 per cent drop in total external revenue in the first quarter to £727million.

Oil industry engineer Wood Group has rejected a takeover bid from foreign predators after becoming the latest London-listed company to be targeted.

It turned down a £1.4billion offer from Dubai rival Sidara because it ‘fundamentally undervalued’ the company, Wood said. The rejection came as it emerged Bristol chipmaker Graphcore is a target for Japanese investment giant SoftBank.

The Bank of England will at midday publish its Monetary Policy Committee’s latest decision on UK interest rates. Market forecasters expect the bank to hold base rate at its current level of 5.25 per cent.

Current market consensus suggests the BoE will wait until the summer alongside the European Central Bank – but before the US Federal Reserve pulls the trigger on rate cuts.