The offer is expected to be over £1.6 billion ($2.10 billion) for ITV’s media and entertainment division, which includes ITV’s streaming platform and subscription-free television channel, according to a Bloomberg News report, citing ITV.
- Analysts have noted that viewership for traditional TV channels has seen a slowdown, with more consumers turning to streaming services for entertainment.
- Dan Coatsworth said that the potential deal to sell the media arm to Sky appears to be an ideal situation, as ITV eliminates the weaker part of its business, which has less attractive growth prospects.
- He noted that the £1.6 billion mooted price is based on enterprise value, which includes debt; however, there are no details about how much borrowing would be allocated to the media division.
Comcast’s (CMCSA) Sky is reportedly in talks with British company ITV to acquire its media and entertainment unit, with AJ Bell’s Head of Markets, Dan Coatsworth, expressing surprise on Friday that this arm has attracted a suitor, rather than its Studios.
The offer is expected to be over £1.6 billion ($2.10 billion) for ITV’s media and entertainment division, which includes ITV’s streaming platform and subscription-free television channel, according to a Bloomberg News report, citing ITV.
“The jewel in ITV’s crown has long been its production arm, which makes TV shows for broadcast on its channels as well as licenced to third parties. This part of its business, called ITV Studios, was always seen as the most likely bit to receive a takeover offer,” Coatsworth said.
He noted that there was a lot of uncertainty over whether anyone would want to relieve ITV of this ball and chain, and so to see interest from Sky is “Christmas come early for management and shareholders.”
Weak Demand For ITV’s Media & Entertainment Arm
Analysts have noted that viewership for traditional TV channels has seen a slowdown, with more consumers turning to streaming services for entertainment.
“ITV has done a fantastic job of staying relevant with the ITVX platform, and it’s fair to say that has been a much bigger success than people thought when it originally launched,” Coatsworth said.
“Despite the success of ITVX, the media and entertainment arm has acted like an anchor on the group. ITV’s latest results show that advertisers these days prefer to run promotions on digital platforms and not traditional ‘live’ TV,” he added.
Coatsworth noted that this has resulted in problems for the broadcaster, meaning that the historical revenue generation engine has become lopsided.
Media & Entertainment Unit Sale: An Ideal Move
“The potential deal to sell the media arm to Sky looks like an ideal situation, as ITV gets rid of the weaker part of its business, and the one with less attractive growth prospects,” Coatsworth said.
He noted that the £1.6 billion mooted price is based on enterprise value, which includes debt; however, there are no details about how much borrowing would be allocated to the media division.
What Is Retail Thinking?
Retail sentiment on Comcast remained unchanged in the ‘bullish’ territory, with message volumes at ‘high’ levels, according to data from Stocktwits.
Shares of Comcast have declined 27% this year and have fallen nearly 38% in the last 12 months.
£1 = $1.31<
For updates and corrections, email newsroom[at]stocktwits[dot]com.<