Dan Coatsworth, head of markets at AJ Bell, said: “It’s now six months since ITV revealed takeover interest from Sky for its media and entertainment arm.
“Those talks are still ongoing, with ITV promising an update soon. While it’s impossible to say why talks are dragging on, one can only speculate it is disagreement about price.
“Sky is in a strong negotiating position given the linear TV part of ITV’s business faces an uphill battle as more people opt for streaming ‘on demand’ services. It won’t want to pay a big premium to buy it.
“If Sky can’t get a deal over the line, other potential suitors might include European broadcasters such as TF1 looking to expand their reach. Alternatively, private equity might want the whole of ITV and then look to break it up.
“The jewel in the crown is the Studios arm which could be worth a lot more as a standalone entity than part of a media conglomerate.
“Current trading is lacklustre on the media and entertainment side.
“The Middle East conflict has the potential to cause a sharp drop in advertising if companies are worried that the oil price spike is dampening consumer spending.
“There’s no point investing big money on adverts if consumers aren’t splashing the cash. Fortunately for ITV, it appears that advertising activity has trundled along so far, albeit not exactly at big levels.
“A lot of advertising slots are booked well in advance, so there is still the potential for ITV to suffer from a pullback in client activity if oil prices don’t come down soon. There might be a lag effect on its earnings.
“The one saving grace is the World Cup as advertisers might still want to take the risk of booking airtime if they know there will be significant viewing figures for matches.”
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