ITV’s share price has jumped after a report that several investors are considering making bids for the British broadcaster.
The Love Island broadcaster’s share price rose by almost 9% to more than 71p, as investors hoped for a bid battle between private equity companies and rival broadcasters.
The private equity investor CVC Capital Partners and a big European broadcaster, thought to be France’s Groupe TF1, are among those studying the merits of a potential offer, Sky News reported.
The RedBird Capital-owned All3Media – the maker of Googlebox – and Mediawan, which is backed by the private equity group KKR, were also named by Sky News as “potential suitors for the ITV Studios production arm”. However, it is not thought that any formal approaches have been made.
ITV has been the subject of repeated takeover rumours over the past decade, since the Virgin Media owner, Liberty Global, acquired BSkyB’s 6.4% stake for £481m in 2014.
ITV has fended off any interest over the past decade, but it has been left more vulnerable in recent years as its share price has waned, even as analysts and audiences applauded the ITV Studios arm, which makes hits for ITV and other broadcasters. Those include the reality TV smash Love Island for ITV, the Until I Kill You miniseries that aired in New Zealand, Canada and the UK, and the Jilly Cooper adaptation Rivals for Disney’s streaming service.
The share price bump on Monday meant that ITV has recovered most of the losses it made earlier this month when it reported a bigger-than-expected drop in revenues amid a sluggish economy. Before the report, ITV was valued at £2.5bn.
However, the valuation is still well short of the peak of more than £2.60 a share in 2015, or the £1.28 level during the spring of 2021. Its sales of advertising – its main source of revenue – tend to follow the UK’s economic cycle closely. The £1.2bn takeover of All3Media by Redbird has convinced some analysts that the parts of ITV are worth more than its market valuation.
Roddy Davidson, a media analyst at Shore Capital Markets, an investment bank, said a breakup would be a “very credible situation”, given the “trapped value” in the studios arm and the operational separation.
“ITV really in stock market terms has an incredibly low valuation,” he said. “There is clearly a dichotomy in the business between the linear TV business [and ITV Studios].”
The main broadcast TV business still has to prove to investors that it can be a player in online streaming, two years after its launch of its ITV X platform, but producing series has proven to “a much happier hunting ground”, Davidson said.
ITV declined to comment. CVC and TF1 declined to comment. RedBird and Mediawan were approached for comment.
