Shares in ITV (ITV) gained 4% on Wednesday to top the FTSE 100 leaderboard after the company confirmed it wasn’t going to bid for media group Endemol.
Fears that the UK broadcaster would bid for the Dutch-based producer of ‘Big Brother’ weighed on the shares last month, so today’s news clearly came as a welcome relief for shareholders.
Endemol was put up for sale this summer by US media behemoth Twenty-First Century Fox and private equity firm Apollo with an estimated price tag of up to $4bn.
ITV Chief Executive Carolyn McCall had said previously that the company was focused on prior acquisitions as it aims to build its production capabilities but there had been no official denial.
The group has been steadily building its Studios production arm in a bid to reduce its reliance on TV advertising revenues which fluctuate with the overall economy.
In addition it faces stiff competition from subscription services such as Amazon Prime and Netflix which stream their own home-grown content and are eating away at the terrestrial broadcaster’s lunch.
The decision not to bid for Endemol removes the worry that ITV would have to raise a significant amount of cash to finance the deal and could also be taken as a sign of confidence in the strength of its own production and content.
DISCLAIMER: The author of the article, Ian Conway, owns shares in ITV
