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Investing.com -- ITV PLC (LON:ITV) stock surged 15.3% after the British broadcaster confirmed it is in preliminary discussions with Sky regarding a possible sale of its Media and Entertainment (M&E) business for an enterprise value of £1.6 billion.
The company issued a statement in response to recent press speculation, noting that there is no certainty about the terms of any potential agreement or whether a transaction will ultimately take place. ITV said it would make further announcements "in due course if appropriate."
According to media reports, the deal could value ITV’s M&E unit at around $2 billion.
The potential deal would represent a significant shift for ITV, which operates popular television channels in the UK and produces content through its ITV Studios division. The M&E business encompasses ITV’s broadcasting operations, which have faced increasing competition from streaming services in recent years.
"While we expect a positive reaction for ITV shares when the market opens, there are reasons to be cautious. It does not appear from the article that any bid has been received, and we do not know for sure what the bid would be, or if ITV will accept it. In the past management have flagged the value of vertical consolidation," according to UBS analysts.
Sky, owned by Comcast Corp (NASDAQ:CMCSA), is one of the UK’s largest pay-TV operators and has been expanding its content production capabilities. Acquiring ITV’s M&E business would potentially strengthen Sky’s position in the competitive British media landscape.
The talks come amid ongoing consolidation in the global media industry as traditional broadcasters seek to adapt to changing viewer habits and competition from digital platforms.