The world’s biggest advertising group heightened stock market concerns over the strength of the advertising market, putting pressure on the shares prices of European media companies.
WPP’s shares fell 11 per cent to £14.20, its lowest level since February last year, after it blamed weaker revenue growth for a cut in its full-year sales target. It helped to send ITV stock down 2 per cent amid fears that Britain’s largest commercial broadcaster could also be hit by a prolonged slowdown.
Takeover rumours surrounded ITV earlier this year, helping to send its share price above £2 as 21st Century Fox’s approach for Sky fuelled speculation that the terrestrial broadcaster could be the next target in the sector. Liberty Global, BT and Discovery were all said to be interested in ITV but its shares were down to 162½p last night after jitters over the state of the ad market helped to erase its recent gains.
In Paris, shares in the rival advertising groups Publicis and JC Decaux slipped 3 per cent and 1 per cent respectively, to their lowest points in months. In Germany, Prosiebensat 1 Media dropped almost 4 per cent.
“Deteriorating trading conditions are a concern,” Roddy Davidson, media analyst at Shore Capital, said, cutting pre-tax profits projections for WPP by between 4 and 5 per cent. Analysts at Citi noted that WPP’s announcement was “as we feared,” but that “the scale of the slowdown was more than feared.”
Graham Spooner, investment research analyst at the Share Centre, said: “WPP is very much seen as the bellwether of the advertising industry and as such is widely regarded as a global economic barometer and so it is unsurprising the shares have reacted in the way they have,” he said.
Neil Wilson, senior market analyst at ETX Capital, added that technological change was also behind some of the sector’s volatility. “I would suggest that digital disruption is affecting the traditional channels — something that does affect WPP a lot.”
Rupert Murdoch, chairman of News Corp, owner of The Times, is also co-chairman of 21st Century Fox, the leading shareholder in Sky.