The Battle Of The Broadcasters: ITV plc vs Sky plc vs BT Group plc

What will the world be like in a hundred years time? Hard to predict? Well, one thing you can be certain of is that we will still have television.

What exact form TV will take in 2115, who knows, but I suspect it will dominate home entertainment for decades to come. I remember the thrill when we bought our first colour set, a 21-inch Sony Trinitron, way back in the 1980s. These days many people have wall-mounted 46 inch flat screens with full HD , 3D and internet. The picture on my TV is so good that I don’t bother visiting the cinema any more, as the picture is so much better at home.

There’s no doubt about it: television companies will have a big part to play in the future, but which of Britain’s broadcasting giants should you buy?


At the time of the Credit Crunch, most people thought that ITV (LSE: ITV) would be brushed aside by Sky (LSE: SKY), tied as it was to the old licence fee model of British TV. Since then the company has undergone a remarkable transformation, driven by a move to pay-tv platforms such as Sky and Virgin Media, and the internet, as well as growing the number of programmes which it films in-house and sells to broadcasting companies around the world.

The firm’s latest results show just far ITV has come. Revenues were up 13%, with broadcast and online revenues up by 7%. What was particularly impressive was that online, pay and interactive was up a whopping 29%, while ITV Studios revenues were up 28%.

ITV’s strengths in home-grown drama showed through, as did the success of the Rugby World Cup. This is no longer a company dependent upon Freeview and advertising revenue. Instead, it produces a huge range of high-quality content which it sells across all platforms and around the world.

That’s why the share price has been rising steadily, yet the business still seems fairly priced, with a forecast 2015 P/E ratio of 16.38 and a dividend yield of 2.20%.


My view is that Sky is the best TV company in the world. Regular customers will know that the quality and incredible range of programming, backed by world-leading technology such as HD, hard disk recorders and 3D, blows other firms out of the water.

The interesting thing is, it took years for Sky to become profitable, as it gradually built its portfolio of broadcasting assets and its customer base. Now it is, by far, the most profitable media company in the UK. No other business can beat Sky’s offer, from general entertainment and kids’ programmes to sports and movies.

The merger with its sister companies in Italy and Germany means that there is even more scope for growth. The predicted 2016 P/E ratio is 16.82, with a dividend yield of 3.27%. This firm is still a clear buy to me.

BT Group

BT Group (LSE: BT-A) used to be a phone company. Today it is a phone, broadband, business services and broadcasting company. Its recent takeover of Everything Everywhere means that it dominates broadband, mobile and fixed-line telecoms in Britain.

And the revenues it garners from all these operations has funded its push into pay-tv. It took years for Sky to build a profitable business in this sector; I suspect it will be just as difficult for BT, but there is no doubt it has all the resources to succeed.

The firm is priced at a similar level to ITV and Sky, with a consensus estimate of 15.04 for the 2015 P/E ratio, and a dividend yield of 2.94%.

Foolish bottom line

So we have three companies, each of which you could say has a strong stake in the future of broadcasting in the UK. Each of these businesses is booming, and is growing revenues and profits year-on-year.

So how on earth can you choose which to buy? It’s difficult to make up my mind, so my answer is simple: you should buy all three.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has recommended Sky. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.