ITV’s shares fell today after the company issued a trading statement saying it was shelving its dividend and guidance as the coronavirus outbreak wreaks havoc across its production schedule.
ITV’s shares fall
The FTSE-100-listed firm’s shares were down 11.5% at 55p.
“Given the current uncertainty we are withdrawing our market guidance for 2020”, ITV said in a stock market statement.
“In addition, the Board has decided that it is prudent not to propose the final dividend of 5.4 pence per ordinary share (£216 million in total) for the year ended 31 December 2019 at the forthcoming AGM, and to withdraw its previously announced intention to pay an 8p full year dividend for 2020.
It said the savings from not paying the 2019 final dividend, taken with the cash impact of its cost and capex savings, will ensure that more than £300m of cash will be retained within the business.
“The Board recognises the importance of the dividend to our shareholders and will consider the quantum of any interim dividend for 2020 in light of this and of circumstances at that stage.”
The broadcaster said it continues to closely monitor the evolving COVID-19 (coronavirus) situation and its impact on the business.
The channel said its priority remains to protect its people and it will continue to follow all government guidelines.
The recent restrictions on working practices are now having a significant impact on ITV Studios’ ability to film productions.
It has had to pause a significant number of productions in the UK and internationally; which it is doing in a systematic manner to ensure it can resume production as soon as it is able to.
It is implementing contingency plans to enable it to continue to produce as many programmes as possible, particularly its news output and live productions.
Carolyn McCall, ITV Chief Executive, said” “We are operating in unprecedented and uncertain times, requiring us to take difficult decisions, plan carefully and act with speed.
“Our absolute priority is to protect our people, while trying to ensure that we deliver the news and programmes our viewers value and love to watch, and to keep them informed.
“We are actively taking measures to reduce costs and manage our cash flow so that we are best positioned to continue to deliver our strategy of building a digitally led media and entertainment company over the medium term.”
It is too early to quantify the impact of this on ITV Studios’ revenue and profit.
This depends on how long the restrictions are in place.
ITV Studios cost base is largely variable. ITV said it expects to benefit from an additional offset due to increased demand for library sales.
As a leading global distributor, it said it is well placed to deliver this; with a high quality library and strong relationships with broadcasters and platform owners.
“Demand for quality content remains strong and therefore we continue to work on our development slate and we are ready to resume production as soon as we are able”, the company said.