James Mur­doch bought ITV shares for 135p not too long ago. Now, you and I can pick them up for about half that.

Mur­doch didn’t exactly buy them hop­ing them to make a quick buck. But now he has moved to Wap­ping, how does one of his papers cover the ITV story? Dan Sab­bagh plays a pretty straight bat lay­ing out the ter­rit­ory in the Times:

On fun­da­ment­als, ITV is expens­ive, even at these super­fi­cially bombed-out levels. The shares trade at 14 times earn­ings, a premium to European peers, and there are real wor­ries that the high street advert­isers on which ITV depends will start to rein in advert­ising as the eco­nomy tightens.

That has not happened yet, but eco­nomic sen­ti­ment is so poor that the worry is that depend­ence on retail advert­ising is a weak­ness wait­ing to be exposed, rather than a strength.

How­ever, most quoted European broad­casters can­not be bought, because they are tied up with a stra­tegic investor; ITV is the excep­tion. For that reason alone, ITV, with its unique dom­in­ance of Brit­ish com­mer­cial broad­cast­ing remains a com­pel­ling investment.

So far so reas­on­able.

Yet for any­body will­ing to take a view, it is obvi­ous that Sky’s share­hold­ing has more value sold in a block to a would-be bid­der. It is also clear that there is long-term stra­tegic value in the stock. Tele­vi­sion advert­ising may be dif­fi­cult in 2008, but it will improve at some point.

A recov­ery in 2010 would be felt by investors from mid-2009. Mean­while, ITV’s com­pet­it­ive envir­on­ment is rel­at­ively benign. Neither the BBC nor Chan­nel 4 is steal­ing view­ers and 88 per cent of house­holds have switched to mul­tichan­nel. A bid may not be on the agenda yet, but it will come. ITV shares look attract­ive for the patient investor who believes that the eco­nomy will not col­lapse. Buy.

Hmmm.

Here is the FT’s take:

With its shares trad­ing at half the 135p price BSkyB paid, ITV looks at first glance like low-hanging fruit…

Even at 67.9p, up 3.9p yes­ter­day, ITV “is still more expens­ive than most other west­ern TV com­pan­ies”, one invest­ment banker said yes­ter­day. “You can’t raise the debt.”

With an equity value of £2.7bn and £668m of net debt at the end of Decem­ber 2007, ITV is out of reach of any bid­der that needs to tap tightened credit markets…

The big­ger uncer­tainty, accord­ing to one exec­ut­ive who has examined ITV, remains the reg­u­lat­ory régime, which restricts how much ITV can charge its advert­isers. Although the Office of Fair Trad­ing is review­ing the con­tract rights renewal régime, any relief is unlikely to be felt until 2010..

Buy, hold or sell?

In the shorter term, ITV remains “on the cliff” of los­ing its invest­ment grade rat­ing, accord­ing to Chris­tian Rauch, an ana­lyst with Moody’s, which last month rated the group Baa3 with a neg­at­ive outlook.

Should any­thing knock ITV’s bonds into junk ter­rit­ory, any pro­spect­ive buyer may yet be able to strike at a lower price.