Update BSkyB hammered on London market -
BSkyB hammered on London market
BSkyB’s shares tumbled a massive 4.9% yesterday on the London stock exchange. The reason was a negative report from investment bankers J P Morgan.
BSkyB’s shares fell back to 471p. JP Morgan’s cut the company to underweight from overweight and slashed its price target to 560 pence from 700 pence. Indeed, Sky’s fall from grace now means that their stock price is lower than at any time since August 2004 – with much of the good work done by James Murdoch over the past three years now undone.
The broker said it expects advertising revenue to slow because of the deteriorating economic environment. It added the uplift from broadband and lower churn has played out.
Another issue that the market has been discounting, said JP Morgan’s report, is any potential regulatory change arising from the ongoing probe of BSkyB’s activities.
Earlier today, BSkyB COO Mike Darcy accused regulator Ofcom of “trying to prop up” the UK’s broadcasting status quo. Darcy told a London conference that “it is not the job of a regulator to protect the interests of a small group of favoured broadcasters. They should not be trying to prop up a model which has history and tradition on its side, but which faces substantial challenges going forward.”