ITV Scraps Dividend, Along With Everyone Else

ITV is the latest big name to scrap its dividend payout, after they announced a pre-tax loss of £2.37bn this morning.

ITV has the same problem as Guy Hands did yesterday, in that it has had to write down its value in a post-recession world, leading to a goodwill impairment charge that contributes massively to the aforementioned loss. “The world is a very different place from where we were a year ago”, said controller Michael Grade, doomily. ITV’s response doesn’t stray from the familiar recession hymn sheet – cost-cutting centered around job cuts, in their case 600. It’s trying to restructure its payment for costly football contracts, and may close its Manchester studios, adding to the closure of its Leeds base. And it’s getting rid of Friends Reunited, Scoot, SDN, and ITV Local, the last of these unsurprising given ITV were recently allowed by Ofcom to drop their level of local news coverage to four hours a week.

They’re also planning to cut back on expensive drama by an hour a week, and also focus on entertainment shows in evening primetime while cutting back on daytime programmes. So The Bill is being cut from two hours to one, and This Morning could potentially be axed for the summer. Well, every cloud and all that!

It comes in a month where investors are starting to wonder when they’ll ever see returns again as dividends stall worldwide, hence the fresh ruptures in the stock market as they start to pull out. The front page of the FT today tells tale of BP freezing its dividend this year, the first time since 1999, despite their recent 39% profit increase. BP faces low oil prices for a good 18 months, with costs having doubled since 2004  - it’s going to have to borrow to pay its dividend this year, as well as carry on with its £15bn capital expenditure program. It’s dealing with the problem with, you guessed it, job cuts of 5000 and rising, as well as cancelling the future by ditching its alternative energy investments. As the Green Sheet notes, the latter of these cost-savings makes ads like this seem a bit rash now.

General Electric in the US cut its dividend last week from 31 to 10 cents a share, giving a saving of $9bn annually, despite CEO Jeffrey Immelt assuring investors back in November that the dividend would stay the same. Other American megabrands to cut dividends recently include JP Morgan Chase, PNC Financial, Pfizer (insert your own Viagra pun here), and Motorola, who as the FT reports today are one Android-implementing misstep away from disappearing from view completely. Even safe ports like Unilever are warning of profit slowdowns in the coming months, and as an analyst interviewed by the WSJ says, “companies are not going to increase [dividends] right away” – even if earnings go back up, they won’t translate into dividend payouts for a while after that.

Still, 45 companies in the S&P 500 index have increased dividends this year, compared with 34 that have cut them. Let’s just give them another year or so…

Posted by Ben Beaumont-Thomas in Hot Money | March 4, 2009 1:14PM |