The ITV (LSE: ITV) share price crumbled in the recent stock market crash. Investor sentiment towards the broadcaster has remained depressed ever since.
Unfortunately, the company is now also going to be relegated from the FTSE 100. This may only lead to further selling.
However, despite the company’s uncertain outlook, I think ITV shares could be an excellent investment in the long run. Today I’m going to explain why.
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ITV share price declines
Investors didn’t waste any time selling ITV shares earlier this year.
The company was impacted significantly by the coronavirus crisis. Advertising revenue at the UK’s largest free-to-air broadcaster declined by nearly 50% at the height of the crisis. It was also forced to put its production business on ice, as the pandemic made filming impossible.
As it turns out, the company managed to avoid its worst-case scenario. ITV’s first-half results note income and sales were better than expected during the first six months of the year.
Advertisers were quick to pull their business from the firm at the beginning of the crisis, but they returned rapidly when the government started to ease lockdown restrictions.
The company was also able to restart the majority of its production business.
Despite these positive developments, the ITV share price has stayed at a low level. As such, I think now could be a good time for long-term investors to snap up a share of this UK media giant.
Stock market crash bargain
The pandemic showed that ITV remains a force to be reckoned with in the UK broadcasting market.
Despite the decline in advertising revenue, the number of viewers watching its channels reached levels not seen since 2011 in the first half of 2020. The group’s online streaming collaboration with the BBC, BritBox, is also performing ahead of expectations, according to management.
Therefore, it seems to me as if the company has a strong base from which to grow in the years ahead. This should have a positive impact on the ITV share price in the long run.
What’s more, even though the company had to suspend its dividend to conserve cash at the height of the pandemic, the group remains highly cash generative.
This cash generation suggests to me that management will try and restore the dividend later this year. When the company’s outlook has become more predictable, management can restore the dividend with confidence. Resuming the payout could have a positive impact on the ITV share price.
All in all, it’s clear why investors deserted the business at the beginning of the coronavirus crisis. However, recent trading updates show that ITV has weathered the storm.
With this being the case, and considering the stock offers a wide margin of safety at current levels, I think now could be a good time for long-term investors to look at the ITV share price as part of a diversified portfolio.
