• Merged entity to rival BBC Studios, Freemantle
• ITV shares up 22% in past year
• Talks come after RedBird IMI ‘sells’ Telegraph

Shares in ITV (ITV) were marginally lower at 73p in early trading this morning on reports the free-to-air broadcaster is in talks with Abu Dhabi-backed media group RedBird IMI over a combination of their respective production businesses.

If a deal goes ahead, it would centre around merging the ITV Studios business with RedBird IMI’s All3Media, the producer of hit TV show The Traitors.

A transaction would create one of the largest production groups in Europe with revenue of around £3.17 billion, based on 2023 figures reported by the two companies.

ABOUT REDBIRD IMI

RedBird IMI is a joint venture investment vehicle created by former president of CNN Worldwide Jeff Zucker and private equity firm RedBird Capital Partners and Abu Dhabi-based media company IMI (International Media Investments).

It temporarily ‘acquired’ ownership of UK national newspaper The Daily and The Sunday Telegraph for £600 million.

The sum essentially went towards paying off £1.1 billion worth of debt accrued by the Barclay family – owners of the Telegraph titles.

However, last April RedBird IMI had to walk away from the deal after the government published legislation blocking foreign states or associated individuals from owning newspaper assets in the UK.

THIRD QUARTER DISAPPOINTS

Shares in ITV have made impressive gains over the past year, though the company’s last set of results in November disappointed the market.

Group revenue fell 8% at £2.7 billion in the nine months to 30 September and total ITV Studios revenue was down 20% to £1.21 billion, impacted by the expected phasing of production deliveries and the 2023 US writers’ and actors’ strikes.

ITV shares tank after lower third quarter revenue from Studios business

ITV will be publishing its full-year 2024 results on 6 March.

EXPERT VIEW

Russ Mould, investment director at AJ Bell said: ‘Plenty of people have been banging the drum that ITV’s parts are worth more than the sum of the whole. The Studios arm is the key attraction as content is king in the modern media world.

‘ITV has been under pressure from investors to halt the decline in its share price and realise hidden value in the business. In 2023, ITV showed interest in buying All3Media, so it obviously thinks there is merit in working together. A merger would create one of the biggest forces in TV and film production.

‘The big stumbling block is the fact that streaming platforms and broadcasters are cutting budgets and either commissioning fewer productions or asking for series to be shorter in terms of episodes and run-time. That somewhat clouds the outlook for a combined ITV Studios/All3Media entity, at least in the short term.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (James Crux) own shares in AJ Bell.

LEARN MORE ABOUT ITV

---