UK broadcaster ITV’s shares jump by 10% amid reports of takeover interest
ITV Studios is behind dramas including Fool Me Once for Netflix
Shares in UK broadcaster ITV climbed 10% on Monday following a report that several potential bidders are weighing up offers for all or parts of the business.
Over the weekend, Sky News reported that Jersey-based private equity firm CVC Capital Partners has held early-stage talks with ITV about a deal that would see CVC partner with an unidentified European broadcaster, possibly France’s TF1 Group, to make an acquisition.
One potential deal, according to Sky, would see CVC acquiring ITV’s commercial arm, ITV Studios, with a European broadcaster buying the UK broadcasting business, including its streaming service ITVX.
The news outlet also said All3Media, which was acquired by private equity firm RedBird Capital Partners for £1.15bn (US$1.45bn) earlier this year, and KKR-backed French outfit Mediawan were among the potential suitors for ITV Studios.
In its report, Sky News said various discussions have taken place in recent weeks but cautioned that none of the talks were far enough along to require disclosure to investors.
If any deal were to come to fruition, it seems likely it would lead to a break-up of ITV and ITV Studios, the latter of which houses some 60 production labels across 12 territories, including the ITV America unscripted group, and has a library of around 90,000 hours of content.
Shows produced under the ITV Studios banner include Fool Me Once (Netflix), Rivals (Disney+), Shetland (BBC), Grace (ITV), The Forsyte Saga (PBS Masterpiece), Destination X (BBC), the French version of competition format Gladiators (TF1) and upcoming Prime Video drama The Better Sister.
Sky News reported that ITV CEO Carolyn McCall had held talks with the company’s financial advisors about the potential merits of separating its two main business units. Such a move has been mulled in the past but has not come to fruition, in part due to the complication of separating the broadcast and channels business from the studio unit that supplies most of its content.
ITV Studios is the most profitable part of the overall ITV business and, while it posted a 20% revenue decline in the most recent quarter due partly to the impact of last year’s US strikes, it is profitable and viewed as an attractive asset. In addition, like so many channel-owning media companies, ITV is managing decline in its linear business while simultaneously growing its direct-to-consumer offering.
The report that several companies are kicking ITV’s tyres comes as the broadcast group’s share price has continued to languish. After reporting third-quarter earnings earlier this month, ITV shares dropped from 74.6p to under 63p a share. ITV stock traded as high as £2.70 per share in 2015 and has steadily fallen in the nine years since. On Monday, shares jumped nearly 10% to 71.15p following the Sky News report, which came after the share price crept up by around 5% on Friday as deal chatter first began.
ITV has regularly been involved in M&A speculation over the past 15 years, both as an acquisition target and as an asset buyer.
In 2008, rumours swirled that Italy’s Mediaset was preparing a bid, while other rumours have linked the likes of Liberty Global with a bid for the company. ITV has also been linked with major acquisition moves of its own in recent years, with the company tabling a bid for Entertainment One in 2016 and being viewed for several months as the frontrunner to acquire All3Media.
ITV joins a growing list of high-profile companies that are seemingly on the auction block. A recent report by Reuters suggested RTL is exploring options for European production-distribution giant Fremantle. Meanwhile, there is growing speculation that Channel 5 could be up for sale in the new year once Skydance completes its acquisition of the pubcaster’s owner, Paramount Global.
