ITV’s shares rose by 9% on Monday following media reports suggesting the British broadcaster could be a takeover target for a consortium led by CVC Capital Partners. The company's stock has garnered interest from several potential buyers, with some holding initial discussions about a possible acquisition.
Reports indicate that CVC, a private equity firm, may join forces with a European broadcaster such as France’s Groupe TF1. Under this potential deal, the two parties would divide ITV’s assets—CVC would acquire ITV Studios, while TF1 would take over the broadcasting division. Additionally, companies like All3Media, owned by RedBird Capital, and Mediawan, backed by private equity firm KKR, are also eyeing ITV Studios, according to Sky News.
By 10:30 AM GMT, ITV’s stock was trading up 9% at 71 pence, on track for its biggest single-day rise since March. This surge increased ITV's market capitalization to £2.7 billion ($3.4 billion). However, over the past three years, ITV shares have dropped 40%, weighed down by concerns over advertising revenue and challenges with the profitability of its ITVX streaming platform. Analysts suggest that breaking up the company could potentially enhance its value.
Analysts from Citi highlighted a positive trend at ITV, with a shift from traditional broadcasting to content production and from linear to streaming within the broadcast segment. They also noted that ITV’s current valuation appears appealing. "In other words, the broadcasting side—which currently generates around £2.1 billion in revenue and about £240 million in operating profit—would be valued at less than nothing," they commented.
Speculation about a potential split within ITV isn't new, but analysts acknowledge that keeping the company together has its advantages. The Studios division, for instance, benefits from more stable revenue compared to the unpredictable nature of advertising, and it supplies a significant amount of content to ITV's broadcasting arm.