London-based hedge fund, Silchester International Investors LLP, has recently acquired a significant 5% stake in ITV, the U.K.’s largest commercial television broadcaster. The purchase comes at a time when the broadcaster is grappling with a decline in the advertising market, resulting in a slump in its share price over the past year.
According to regulatory filings, Silchester International Investors LLP has invested around £120 million ($152 million) in ITV. The hedge fund, established in 1994 and situated in the heart of Mayfair, specializes in international equity investment for institutional investors. It aims to generate attractive long-term returns through investments in quoted international equities.
Silchester International Investors LLP’s investment philosophy focuses on identifying companies that have the potential to increase earnings, assets, and dividends through their own efforts. Notably, the firm has previously built stakes in major British companies such as Tesco and GSK, highlighting its expertise in the industry.
While Silchester keeps a low profile, it has made notable investments in prominent television broadcasters and media companies worldwide. Among them are Luxembourg’s RTL Group and Hong Kong’s TVB. In 2022, Silchester made headlines when it became WPP’s third-largest investor, amassing a £500 million stake in the British advertising giant. This move fueled speculation about potential actions to drive a break-up of the multinational communications firm.
Despite this recent development, ITV’s shares experienced a 33% drop in value over the past year due to the advertising market’s slump. As a result, the broadcaster faces significant challenges in maintaining its revenue from free-to-air broadcasting.
The partnership with Silchester International Investors LLP brings new prospects for ITV’s recovery and long-term growth. With their expertise and track record, the hedge fund’s involvement could potentially contribute to ITV’s efforts to overcome the current market challenges and secure a more prosperous future.
ITV, the first privately-owned television broadcaster in the UK, now finds Silchester as its seventh largest shareholder. Silchester joins telecommunications company Liberty Global (9.83%), and asset managers Brandes Investment Partners LP (5.83%), RWC Asset Management (5.63%), Schroder Investment Management (5.2%), Artemis Investment Management (5.1%), and Threadneedle Asset Management (5.07%).
ITV’s revenue comes from two primary sources. Firstly, it sells advertising slots on its television network. Additionally, the company produces shows that it sells to various broadcasters, including Amazon Prime and the BBC.
Traditional TV broadcasts have seen a decline in viewership as more individuals switch to streaming services like Netflix and Amazon Prime. This transition has impacted ITV financially due to a drop in spending on television ads. However, ITV’s studio business has experienced growth in recent years thanks to the popularity of shows such as Love Island and Come Dine With Me.
ITV’s drama “Mr Bates vs. the Post Office,” which delves into the UK’s post office scandal, became the highest-rated new drama for the broadcaster in the past decade. It attracted a remarkable 14.8 million viewers.
While Silchester International Investors, who recently acquired a stake in ITV, have declined to comment, this development marks an important milestone for both parties involved. ITV continues to navigate the changing landscape of television and adapt to new revenue streams while maintaining its position in the industry.