Goldman paints a bleak picture for ITV, BSkyB

It was a bleak day for broadcasters as

The City big-hitter notes ITV's recent rally, from an all-time low of 26p in October, has left the Coronation Street broadcaster trading at an almost record premium to the rest of the sector.

After signs of a further decline in audience share and a worsening outlook for its content division, Goldman says ITV could suffer a funding shortage by 2010. This could result in a suspension of its dividend and force chairman Michael Grade to make programming cuts.

Analysts also warn the chances of the Footsie 100 reject attracting a bid have receded since November, but that a high chance of an offer is priced into the shares. Big Brother creator Endemol and RTL, the European media giant which owns Channel 5, have been mooted as suitors. Goldman's bearish assessment left ITV off ¾p at 39p.

BSkyB also suffered at the broker's hands. Advising clients to dump the stock, Goldman has cut its price target from 500p to 457p. Analysts say that the satellite broadcaster has outperformed the rest of the media sector, leaving Sky "priced for perfection" despite concerns that its traditionally defensive nature will not be enough to save it from the impact of global recession. This month BSkyB is expected to be forced to admit a marked slowdown in subscriber growth. It lost 24¼p to 450¾p.

The FTSE rallied at lunchtime after the key non-farm payroll figures came out in line with expectations. In thin trading, it rose 14.11 points to 4519.48.

The quiet day added to the injury for the London Stock Exchange, which admitted the average daily value traded on the exchange had almost halved in December. Last month, the total number of trades on the LSE was down 10% on 2007. Its shares dropped 3p to 590½p.

Oil titan ExxonMobil could be about to go on a shopping spree, according to rumours doing the rounds. BP, off 5¼p at 526¾p, was thought to be the likely candidate, but BG, 10½p lower at 990½p also got a mention. Speculation was sparked by a Bernstein note, pointing out that Exxon has cash to splash and could hoover up rivals looking cheap.

This wasn't the only rumour reappearing. Market talk was again that interdealer broker iCap, up a penny at 312p, might be looking at launching an ambitious bid for hedge fund giant Man Group, down 2½p at 250½p. But some traders were quick to dismiss the story, saying that iCap has enough on its plate without taking on Man and that it is simply not the type of group to splash out on a takeover, particularly of a bigger company, when a better option would be simply to poach staff.

Miners were getting a hammering after bearish notes from Merrill Lynch and Deutsche Bank. The brokers were pessimistic on the prospects for the sector and on base metal prices. Anglo American was London's biggest dud, diving 92p to 1531p, while Xstrata sank 42½p to 838p. Antofagasta bucked the trend, up 16¼p to 476¼p.

Deutsche has long been a fan of HMV and again advised clients to stock up, claiming the next 12 months will be transformational for the group. The banking giant predicted the demise of Zavvi long before it collapsed into administration, and expects HMV's competitor will go into liquidation before the end of HMV's financial year.