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ITV a “credible candidate” for sale

There has been recent speculation that Britain’s largest commercial broadcaster, ITV, is not only up for sale but that US cable giant Comcast might well be a buyer. This is not the first time that American names have been cited as potential buyers. A month or so ago it was Liberty Global (which already owns a 10 per cent stake in ITV) that was mentioned as a potential buyer.

The gossip has provoked a report from equity analysts at Exane/BNP-Paribas, which in a note to clients says that while it is difficult to assess the credibility of these latest reports, the bank sees ITV as “increasingly attractive to US trade buyers”.

The report says: “Comcast has a market cap of >$100 billion so has the firepower and owns NBC Universal, a division that generates c$25 billion revenue and $5,5 billion operating cash flow through cable, network TV and content production. For example, NBC Universal is the producer behind Downton Abbey which has been a flagship ITV hit show.”

“We continue to see ITV as a credible bid candidate,” the bank adds. “We note Liberty Global own 10 per cent of the shares. ITV’s ITV Studio division (c25 per cent EBITA) offers exposure to attractive and strategically valuable TV content. We also would expect synergies between ITV Studios and TV production peers (e.g. All3media owned by Discovery/Liberty or Comcast owned NBC Universal) and per our recent feedback from the Royal Television Society we see US players as attracted to the PSB system supported FTA US TV market relative to their own structurally challenged market. On the other hand ITV remains primarily exposed to a UK ad market (c75 per cent EBITA) that has been strong for a number of years and shares some structural risks with the US (transition to digital video consumption may pressure ad market share.”

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