- ITV’s venture capital arm to take stake in pet health firm PitPat
- ITV AdVentures was set-up in 2021
- Deal too small to move the dial, says analyst
Everyone knows ITV (ITV), the UK TV broadcaster and streamer, but what links it to a pet foods business probably needs a bit more explanation. ITV has agreed to subscribe for £3 million worth of shares in pet health and wellness company PitPat, with the option to subscribe for a further £1 million of stock.
Instead of cash, the broadcaster will offer PitPat advertising slots across ITV channels and ITVX, it’s online streaming service.
EXPLAINING ITV ADVENTURES ARM
This is not the first media-for-equity investment ITV has made this year through its ITV AdVentures arm, which was launched in 2021. In March, the unit handed advertising slots worth £3 million in architectural tech company Resi, which hopes to create a more sustainable home improvement market.
Media-for-equity deals allows ITV to take minority stakes in early stage digital and direct-to-consumer businesses in much the same way a venture capital investor might. Rather than using cash, ITV is able to trade a commodity it has plenty of - advertising space.
The idea is that investee companies get to build scale and exposure through TV advertising alongside a strategic media partner. ITV, in turn, gets a stake in fast-growing disruptor businesses, in PitPat’s case, the $250 billion global pet health market.
PitPat helps ‘pet parents’ keep their animals healthy, safe and happy with its subscription-free GPS tracker, activity monitor and foods.
Sheena Amin, director of ITV AdVentures, said: ‘We know that ITV viewers index highly as pet owners and I'm confident that we can help drive category awareness for pet GPS trackers and put PitPat on the map at the same time. I've always been thoroughly impressed by Andy and his team and have full faith in their ability to go after a huge market opportunity and win in this space.’
WHAT ANALYSTS THINK
Roddy Davidson, head of research, equity analyst for media and digital for Shore Capital told Shares: ‘The media-for-equity strategy is a relatively new initiative – in essence it’s a way of supporting early stage/small enterprises, which fits in with the group’s aspirations to make a wider contribution to business, the economy and society.’
Davidson adds: ‘We see it as a positive initiative in that regard, but it is small scale and entails an element of speculation, so we don’t see it as a significant revenue driver or source of meaningful shareholder value in the context of the wider group.’
ITV is not the only broadcaster striking media-for-equity deals, the BBC has been pursuing a similar strategy for several years, while Channel 4 and UKTV launched venture capital units in 2015 and 2018 respectively.
According to entrepreneur Grégoire Vigroux, the founder of food waste app Bonapp.eco, the model has been around for 30 years, but it is only recently that it has become popular worldwide.
Media-for-equity is also used by broadcasters in Switzerland (Ringier) and Italy - MediaForEurope (MFEB:BIT), formerly known as Mediaset, while online used car retailer Cazoo (CZOO:NYSE) runs its own similar operation.
