- Market speculation ITV might demerge
- ITV has made no comment
- Year-to-date ITV shares have gained 11%
Shares in ITV (ITV) were nearly 9% higher at 71p in morning trading as rumours circulated of potential suitors for the free-to-air-broadcaster.
According to Sky News, a number of possible bidders for part or all ITV have emerged including a European broadcaster France’s Groupe TF1 and CVC Capital Partners (CVC:AMS) – a Jersey-based private equity and investment advisory firm.
RedBird Capital-owned All3Media and Mediawan which is backed by KKR – a private equity giant – have expressed an interest in ITV Studios, according to sources.
Potential bid interest comes as no surprise considering the free-to-air broadcaster’s recent third-quarter results which saw group revenue falling by 8% to £2.7 billion.
Total ITV Studios revenue was down 20% to £1.21 billion impacted by the 2023 US writers’ and actors’ strikes and lower demand from free-to-air broadcasters in Europe in the short-term.
However, ITV’s on-demand streaming service ITVX bucked the negative trend for the third quarter and continued to perform strongly with 14% growth in streaming hours and 15% growth in digital advertising revenue.
EXPERT VIEW
Russ Mould, investment director at AJ Bell said: ‘A depressed valuation and relative weakness in sterling are the context for reports of bid interest in ITV – with the possibility of yet another domino falling in a UK market which has seen plenty of M&A in 2024.
‘ITV has faced a difficult transition away from its reliance on linear TV advertising and its push into areas like streaming and TV production haven’t done enough, rightly, or wrongly, to impress the market.
‘Several names from private equity and within the industry have been suggested as potential suitors – although nothing has emerged yet which has reached the threshold required for ITV to make any disclosures. Whether ITV’s public service broadcasting remit might be an obstacle to any deal remains to be seen.
‘There is further speculation that ITV might look to demerge the business on the basis that the individual parts might attract a better valuations as standalone entities – particularly its ITV Studios production arm.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
