Wednesday 5 February 2014 6:31 am

Why ITV's new drama channel should excite investors

It might be time to change the channel. 

It’s not just Downton Abbey fans who are excited by the news that ITV's launching its first pay-TV channel, dedicated to British drama. The head of trading at Galvan, Ed Woolfitt, has some advice for investors and telly-watchers alike: “switch over and buy ITV”.

Encore will be exclusive to Sky’s satellite and online platforms, as part of a new four-year partnership with ITV.

Due to launch this year, Encore will re-run popular programmes and, from 2015, will air new commissions too.

Galvan highlighted ITV shares three times towards the end of last year, and once again it’s come up on the adviser’s recommendation sheet.

The general diversification that a push into TV and the (long overdue) move into pay-TV is welcome, says Woolfit – it underlines the broadcaster’s strength and flexibility.

Given that the company is a play on the UK economic recovery, the new Encore channel appears ideally timed to capture extra revenues from the consumer, while the ultra-solid fundamentals are also supported by the ongoing uptrend in the shares.

The dream scenario, according to Galvan, is ITV successfully playing catch up with Encore.

The nightmare is that the late but well flagged arrival is already priced in, following the recent strong shares price performance. 

But be that as it may, with shares within a rising trend from last July, Galvan’s projection is for a near-term test of the top of the 2013 price channel target at 215p plus.

Shares are currently up 0.9 per cent at 197p: