Investors tune in to ITV as it plots Studios stake sale
ITV shares rose after it was revealed it is considering selling a stake in its production arm, which makes shows including Love Island and Coronation Street.
The FTSE 250 broadcaster is said to be mulling over the sale of a portion of ITV Studios.
Shares rose 9.1pc, or 5.64p, to 67.34p but are still down around 40pc this year.
An ITV spokesman said: ‘The board of ITV continuously reviews opportunities to increase shareholder value. However, we don’t comment on speculation.’
The production arm is one of the largest content producers in Europe and private equity groups are understood to be interested in taking a stake.
ITV Studios could be worth up to £3bn, according to estimates from Citi analysts.
The broadcaster is aiming to roll out its platform ITV X to coincide with the start of the football World Cup next month.
AJ Bell investment director Russ Mould said ITV faces a number of challenges such as reducing its dependency on advertising and a drop in the number of people using traditional television sets over the long term.
Panmure Gordon analyst Johnathan Barrett said an outright sale of the Studios arm was ‘unlikely’ given its operational and strategic value to ITV.
He added: ‘A stake sale would, however, shine a light on the value of the content business and would underscore just how lowly valued the broadcast and video- ondemand (VOD) operations are.’
Shore Capital analyst Roddy Davidson said the commercial logic behind selling a stake in ITV Studios is ‘questionable’.
He said: ‘ Being an integrated producer and broadcaster is a commercially and competitively valuable feature of ITV – so breaking up the business would not be a desirable strategy.’
The FTSE 100 was up 0.9pc, or 61.45 points, to 6920.24 and the FTSE 250 gained 2.76pc, or 470.02 points, to 17,502.84.
Chancellor Jeremy Hunt wasted no time in overturning most of the tax-cutting measures unveiled in last month’s mini-Budget by his predecessor Kwasi Kwarteng.
Laura Suter, head of personal finance at AJ Bell, said Trussonomics has been brought to an abrupt end by the announcement.
‘The Chancellor signalled that government departments will need to find more cost savings, which feels like austerity in all but name,’ she added.
Housebuilders appeared to breathe a sigh of relief as the last month’s stamp duty changes remained one of the few measures left untouched by the chancellor.
Shares in Barratt Developments rose 3.8pc, or 13p, to 360p, Persimmon gained 4.8pc, or 58.5p, to 1269.5p and Taylor Wimpey climbed 3.8pc, or 3.32p, to 91.28p.
Pharmaceutical giant GSK also helped to lift London’s top index as shares rose 0.3pc, or 3.8p, to 1354p after its Menveo drug was approved by US regulators for use in patients with meningitis.
Rival AstraZeneca was up 0.5pc, or 44p, to 9862p having received a vote of confidence from analysts at Shore Capital, who issued a ‘buy’ rating and said the company’s study of cancer remains a key growth driver.
BP shares fell 1.2pc, or 5.6p, to 449.45p despite the oil giant agreeing to buy US renewable natural gas producer Archaea Energy for £2.9bn. BP expects the deal to help double its profit from biogas to around £1.8bn by 2030.
Shares in Mike Ashley’s Frasers Group rose 2.7pc, or 17p, to 658p after the retailer urged MySale investors to back the takeover offer. Frasers, which also owns Sports Direct and Jack Wills, is the largest shareholder in the Australian fashion firm through Ashley, who has a 55.34pc stake.