ITV poised to drop out of FTSE 100 after collapse in advertising

ITV is poised to lose its place among the top 100 UK companies, with billions wiped off its market value after an unprecedented fall in advertising during the coronavirus pandemic.

The broadcaster is expected to be relegated from the FTSE 100 when the next quarterly shuffle is announced by the London Stock Exchange on Tuesday.

It will be only the second time the Love Island broadcaster has fallen out of the index of the UK’s top companies since it listed as a single company in 2004.

ITV’s market value has slumped by 60% this year to £2.4bn after it was hit by the steepest decline in advertising in the broadcaster’s 65-year history, as companies froze marketing budgets during lockdown.

The company’s shares are trading at levels not seen since 2011, renewing speculation that ITV could become a takeover target. The last time ITV dropped out of the FTSE 100 was in 2008, when the advertising recession drove the company’s share price below 20p.

ITV’s shares are trading at around 60p, almost two-thirds lower than the 171p they were at the day Carolyn McCall, the company’s chief executive, joined in January 2018. More than £4bn has been wiped off its market value since then, although McCall has said the business is under-valued and the worst is now over.

However, the advertising recovery is too late to stop ITV’s relegation when FTSE Russell, the body that oversees which companies are included in the various LSE indices, undertakes its quarterly reshuffle on Tuesday.

A company is automatically relegated from the top index if its market value ranks it as the 111th most valuable listed company or lower. With ITV ranked at about 140th, its fate looks to be sealed.

“September should have been a month of celebration for ITV as it marks the 65th year since the TV company was founded,” said Susannah Streeter, a senior investments and markets analyst at Hargreaves Lansdown. “Instead it could be retiring from the FTSE 100.”

The budget retailer B&M, which became a publicly listed company in 2014, looks likely to move up from the FTSE 250 to replace ITV. B&M’s share price has risen by 80% since April as its model proves a winner with consumers during the pandemic.

The commercial property company British Land’s tenure in the FTSE 100 is also under pressure, with Direct Line, which was relegated last year, the most likely replacement.

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