- Half-share in BritBox International sold
- Share buyback to begin ‘imminently’
- Focus on ITVX and ITV Studios
In a demonstration of what can happen when a down-in-the-dumps company delivers some positive news, shares in ITV (ITV) rallied 15.5% to 64.6p after the free-to-air broadcaster announced the sale of its 50% interest in BritBox International to joint venture partner BBC Studios for £255 million in cash.
ITV, whose shares have more than halved over the past five years, was the FTSE 250’s best performer as it promised to return roughly £235 million of net disposal proceeds to long-suffering shareholders through a buyback expected to launch following its annual results on 7 March.
SHARPENING THE FOCUS
A digital subscription streaming service that broadcasts shows including Vera and Death in Paradise, BritBox was originally founded by both ITV and the BBC and operates in a number of countries including the US and South Africa.
Guided by chief executive Carolyn McCall, ITV has now sold its entire 50% interest in the service to BBC Studios.
The British media giant explained the disposal reflected management’s strategy of focusing on ‘supercharging’ its UK advertiser-funded streaming service, ITVX, whilst growing the ITV Studios production business.
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However, under the terms of the agreement, ITV Studios will continue to receive an ongoing revenue stream from BritBox similar to current levels for the use of ITV content under new extended licensing agreements.
BritBox UK is unaffected and will still feature BBC content as part of separate long-term agreements.
THE EXPERT’S VIEW
Russ Mould, investment director at AJ Bell, commented: ‘BritBox International was always the runt of the litter when it came to streaming services, with a primary focus on classic British TV productions rather than competing against Netflix (NFLX:NASDAQ), Disney (DIS:NYSE) and Amazon (AMZN:NASDAQ) with big-name films and shows. While there is an audience for this type of content, it’s much smaller compared to the mainstream platforms.’
Mould explained that ITV’s decision to sell its 50% stake in the venture was ‘inevitable as the company has been busy trying to grow its own ITVX streaming platform. It always seemed like an odd fit to be in a 50:50 venture with an arch-rival and bowing out effectively signals that BritBox wasn’t worth the effort for ITV.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.
