ITV'S shares soared 12% yesterday after it emerged that executive chairman Michael Grade has been approached by potential investors interested in BSkyB's stake in the broadcaster.
ITV'S shares soared 12% yesterday after it emerged that executive chairman Michael Grade has been approached by potential investors interested in BSkyB's stake in the broadcaster.
The stock has been trading at 16-year lows in recent days but the revelations added 4.625p to its shares as they closed at 42.875p.
Satellite group BSkyB owns 17.9% of ITV and is challenging a Competition Commission ruling that it has to reduce that to less than 7.5%.
Analysts are still unsure any suitor would want to acquire the whole company at a time of regulatory and economic uncertainty although the co-founder of producer Endemol, John de Mol, has said he would not rule out a bid for ITV, which had seen its shares slump by more than 55% this year on concerns about demand for advertising.
Kaupthing analyst Johnathan Barrett said in a note to clients: "We question whether there is anybody really brave enough to buy ITV at this point, given the outlook and valuation."
Other companies linked in the past with ITV include Germany's RTL, which owns UK station Channel 5, and Italy's Mediaset.
American broadcasters and investment group Saban Capital are also thought to have become interested as ITV's shares have fallen.
Grade was hired by ITV in November 2006 from the BBC to turn around its fortunes, a task in which he can claim to have had some success.
Last year, ITV as a group, including all the digital channels, recorded its first year-on-year audience increase since the 1990s. Viewing share across the ITV family of channels is up 1.6% at 23.4% compared to the year before.
Profits fell last year by £100m to £188m but the company has reported a rise in revenues in the early months of the year and claims it is outperforming the rest of the UK TV advertising market.
Among the factors making a bid uncertain is the lack of consensus on the outlook for the economy and the advertising market in particular.
The picture is particularly complicated as the Office of Fair Trading looks at how much the main ITV1 channel can charge for advertising and regulator Ofcom examines whether broadcasters including ITV could drop some of their public service remit.
BSkyB bought the ITV stake in 2006 at 135p a share for £940m in a deal which effectively blocked cable group NTL (now Virgin Media) from buying the company.
Analysts believe BSkyB will try to hold on to the stake for as long as possible in the hope its value will rise. The Competition Appeal Tribunal is expected to give its verdict soon but BSkyB could still appeal further.
