Mayfair fund snaps up ITV stake amid ad downturn

A MAYFAIR fund has taken a £120m stake in ITV as the broadcaster grapples with a deep advertising downturn and slump in its market value.

Silchester International Investors has become one of ITV’S largest shareholders after snapping up a 5pc stake in the business.

The media-shy fund, which has also built a £500m stake in advertising giant WPP, states its investment philosophy is to identify fairly valued businesses “capable of increasing earnings, assets and dividends by their own efforts”.

Its investment in ITV makes it one of the broadcaster’s top five shareholders.

The stake-building is likely to stoke speculation about a potential sale or break-up of the public service broadcaster as it battles a sharp decline in advertising that has wreaked havoc across the TV sector. Dame Carolyn Mccall, chief executive of ITV, has described the downturn as the worst since the financial crisis, with ad revenues set to fall by 8pc across 2023.

Shares in ITV, which is best known for programmes including I’m A Celebrity… Get Me Out of Here!, are down by more than 55pc over the past five years and are trading close to their lowest level since the financial crisis. This has left the broadcaster with a market value of under £2.4bn, well below its peak of more than £11bn in 2015.

The dwindling valuation, coupled with broader concerns about the future of traditional TV in the streaming era, have fuelled speculation that ITV could become a takeover target.

Analysts said that the forthcoming renewal of ITV’S Channel 3 licence, which will guarantee its status as a public service broadcaster for the next decade, would provide added certainty to any potential bidder. Alex Degroote, a media analyst, said ITV was “just ripe for a break-up or sale”.

The broadcaster is battling with a decline in traditional TV viewing as audiences increasingly move to streaming rivals such as Netflix and Disney.

It has launched its own streaming service, ITVX, in a bid to reach younger viewers. Last month, Mr Bates vs The Post Office, a drama about a miscarriage of justice that resulted in hundreds of sub-postmasters being wrongly accused of theft and fraud, became ITV’S biggest new drama in a decade.

However, a broader decline in audiences and changing viewing habits have forced bosses to focus on its production business, ITV Studios, which is behind the hits made for other broadcasters including Line of Duty.

Silchester, which was set up in 1994 by the multimillionaire Stephen Butt, has more than £32bn in assets under management and also holds significant stakes in Tesco, GSK and Kingfisher, the owner of B&Q. ITV and Silchester declined to comment.