If you are a shareholder of ITV or BSkyB, then Wednesday 4th August 2004 will not have been a good day for you. ITV plc shareholders may have only seen a half pence fall in their share price, down to 102.5p per share, but the shars have recently been hovering around, and some days dipping below, the psychologically important £1 per share mark. This level is important because when a new company is created, the 100 shares used to create it, are all valued at £1 a share. In London, this psychological level of £1 a share is similar to the level of $10 a share in New York. Once a company drops below that level, having started significantly higher, it has an incredibly tough time getting back above it, and on some occasions, the share price has never recovered, and sometimes, the company who's price dropped below that level has gone on to collapse or go into liquidation. The very fact that ITV plc's shares are dangerously flirting with that level, down over 30% from their starting price on February 2nd 2004, is a really bad sign. Obviously, the shareholders are not impressed with ITV's performance, and if the price does drop below £1 a share, tentative rescue plans may well have to be made.
BSkyB's shares were looking quite healthy this morning before trade at 602p per share, but profits only in line with expectations and a continued slowdown in new subscriber numbers saw the shares fall 80p almost immediately and end the day down 114p at a price of 488p per share in London trading, wiping off over 15% of the value of BSkyB in a single day. Again, this very much reads like the shareholders are not happy with the performance of James Murdoch's first year in charge, and are letting him know what they think in no uncertain terms. Add to this GWR Group losing 11.25p to 248.75p, Capital Radio down 1.75p to 430.25p, Daily Mail down 14p to 664.5p, EMAP down 8p at 716p, HIT Entertainment down 3p at 227p, Reuters down 5.75p at 315.5p and SMG down 2.5p to 99.25p, and you can see that it has been a red ink day for media shares.
