ITV plc shares soared 18% in early London trading after the broadcaster confirmed discussions with Sky regarding the potential sale of its broadcasting operations.
The stock jumped to 80p, up from 67.7p at Thursday’s close, making it the top performer on the FTSE 250 and lifting ITV’s market capitalisation to around £3 billion, up from just over £2.5 billion last night.
Investors reacted strongly to the confirmation of the talks, which follow reports that Sky’s parent company Comcast is exploring ways to combine ITV’s media assets with Sky’s UK operations to create a more competitive domestic streaming and broadcasting platform.
ITV confirms talks with Sky over £1.6bn sale of media and entertainment arm
ITV plc has confirmed it is in preliminary discussions with Sky over the potential sale of its Media & Entertainment (M&E) division for an enterprise value of around £1.6 billion, following widespread press speculation overnight.
In a statement to the London Stock Exchange this morning, ITV said:
“ITV plc notes the recent press speculation and confirms that it is in preliminary discussions regarding a possible sale of its M&E business to Sky for an enterprise value of £1.6 billion.”
The broadcaster cautioned that a deal was not guaranteed, adding:
“There can be no certainty as to the terms upon which any potential sale may be agreed or whether any transaction will take place. A further announcement will be made in due course if appropriate.”
The confirmation follows reports that Comcast, Sky’s parent company, is exploring the acquisition of ITV’s broadcasting and production operations in a move that could reshape the British television industry and strengthen Sky’s position against global streaming rivals.
The update came just hours after ITV announced plans to temporarily cut £35 million from its budgets, citing a weak macroeconomic backdrop and advertiser uncertainty ahead of the Government’s forthcoming Budget.
ITV also warned that advertising revenue, which still accounts for the majority of its income, is expected to fall 9% during the crucial fourth quarter, which includes the key Christmas trading period.
