Five years ago ITV, the UK broadcaster, was the lead in a tragic story of large debts and little profits, with a market capitalisation below £3bn.
Since 2010, when Adam Crozier became chief executive, ITV has benefited from a rewrite. Boy meets company, company cuts costs, market loves boy, high ratings all round. The shares now trade at 15 times estimated forward earnings and the market cap is more than £8bn. However, previews for next year look dicey.
ITV has plenty of cash flow, comfortably exceeding its capital spending and dividends combined last year. That free cash flow has enabled the company to cut debt. In 2009 operating earnings barely covered interest payments; last year the coverage reached more than 12 times.
Yes, the UK economy has dramatically improved, lifting advertising spend. But still, good show.
And all that has not gone unnoticed. Liberty Global, the US-listed cable company with European ambitions, has bought a six per cent stake in the company from BSkyB.
What ITV does with this cash flow is the latest twist. Berenberg notes that ITV’s audience share, for all its channels, has fallen to five-year lows. To counter this trend, ITV has bought stakes in production companies to make shows such as Pawn Stars (a reality show about pawnbrokers).
But the best hope for continued profit growth comes from the prospect that ITV could begin charging for the shows it now gives to BSkyB and Virgin for free under its UK public obligation.
Credit Suisse thinks that fees for retransmission could add nearly a fifth to its market value.
But do not count on a quick resolution. Discussion on this issue could go on for a long time.
Mr Crozier has built a reputation at ITV (and Royal Mail before) as a cost cutter, not a growth visionary. Spending to create content sounds colourful but is risky. Viewers are fickle.
Shareholders prefer things in black and white.

Discussion points 1 What does the article say about the importance of cash flow to the company?
2 How does the article contrast cash flow and profit as measures of success?