Liberty Global acquired its initial 6.4% stake in ITV in July 2014 at a cost of £481 million, purchasing the remaining holding in the company by BSkyB. No financial details were given, though at market price, the additional stake has a value of about 380 million pounds ($593 million).
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CEO Mike Fries said that given ITV’s operating and stock price performance, Liberty Global was able to increase its stake to 9.9 per cent with no incremental investment by hedging its existing equity position.
Internet-TV and film-streaming services such as Netflix Inc. have reshaped the industry for Liberty Global and other cable companies, because owning the rights to content has become more valuable as programs are accessed in more ways – increasingly via mobile devices and the Internet, as well as through traditional satellite, cable and TV platforms.
According to Liberium analyst Ian Whittaker, while Liberty has stated that it does not intend to make a bid for ITV, “its move suggests that it thinks a move by another player is likely or, at least, an increasing possibility”.
At the same time, Liberty has entered into a hedging transaction with respect to the ITV shares it has acquired and obtained further financing from its hedge counterparty.
ITV has been steadily buying production companies – as it looks to rely less on advertising revenue – which has helped increase its market capitalisation over the past five years from £2bn to £10bn.
Shares in ITV, which reported a 25 percent increase in first-half pretax profit on Tuesday, have risen by 57 percent since Liberty bought its initial stake.
Liberty said it was an “opportunistic” investment.
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At the start of last month he bought Ireland’s free-to-air TV3 channel and also took full control of the sports broadcaster Eurosport.
