With shares down over 40 per cent this year, ITV was lifted this afternoon following rumours that it was mulling a sale of its studio arm.
According to initial reports from the Financial Times, the maker of both Coronation Street and Love Island is said to be actively reviewing whether to dump its stake in ITV Studios.
Analysts at Citi backed the move and estimated that ITV Studios could be worth more than the whole of ITV’s £2.5bn market cap, estimating a value of roughly £3bn.
ITV Studios is the holding group for about 60 independent labels across 13 countries, making it one of the largest producers of scripted and unscripted content in Europe.
The broadcaster has had its eyes on expansion and snapped up a £103.5m majority stake in Plimsoll Productions, the natural history programme, earlier this year.
“Growing ITV Studios with an exciting pipeline of premium programmes is core to our strategy as we further diversify the business by genre,” ITV chief executive Carolyn McCall said at the time.
Studios reported revenues of £1.8bn last year and adjusted EDITDA of £215m, which is set to climb in 2022.
McCall, who previously served as chief exec at easyJet, has previously complained that the studio arm’s value was not recognised in the company’s share price, which has struggled to rally in recent months.
A sale would also mean a respite from the increasingly squeezed advertising budgets, which continue to tighten the firm’s free-to-air offering.
On top of this, a hefty injection of cash could come in handy as the broadcaster gears up to launch its own streaming service, ITVX, in time for the Qatar World Cup next month.
The new ad-supported offering will replace ITV Hub and ITV Hub+, as well as introduce a new premium offering, with extra content and features for paying customers.
However, when news of ITVX first broke back in March the broadcaster lost a quarter of its value as investors raised their eyebrows at the overly saturated streaming market.
ITV said in a statement that it was “continuously reviews opportunities to increase shareholder value,” but would not comment on wider speculation around ITV Studios.
Shares climbed as much as 10 per cent this afternoon to 68.20p.