In major news on UK stocks, ITV PLC (GB:ITV) surged 15% as it offloaded its 50% stake in BritBox International to BBC Studios for £255 million. The company aims to distribute the entire net sale proceeds of £235 million to its shareholders via share buybacks. The buyback is expected to start following the release of its full-year results for 2023, scheduled for March 7, 2024.
ITV is a media company involved in content production and streaming.
More About the Deal
BritBox International, launched in 2017, is ITV’s joint venture with the BBC and offers an ad-free subscription streaming service, featuring an extensive collection of British content.
As part of this deal, ITV Studios will continue to receive revenue from BritBox, sustaining a consistent income level through new extended licensing contracts for the use of ITV content. Moreover, the deal does not impact BritBox UK, which will continue to showcase BBC content under long-term agreements.
Deal’s Rationale for ITV
The deal will allow ITV to focus on its streaming business, ITVX, and expand its global studios division. The timing of the deal is perfect as the company is struggling with declining advertising revenues across its traditional TV broadcast channels. Consequently, ITV is making substantial investments in ITVX to enable advertisers to more effectively target audiences.
Citi analysts view the sale as strategically sound and also believe that utilizing the proceeds for share buybacks would be positively received.
What is the Price Target for ITV?
Based on analysts’ assessments available on TipRanks, ITV stock has received a Moderate Buy consensus rating, backed by seven recommendations. The ITV share price prediction is 79.67p, which implies an upside of 23% from the current price levels.
