Mark Kleinman is Sky News’ City Editor and is the man who gets the Square Mile talking in his weekly City AM column. This week he tackles ITV takeover rumours, the deal extravaganza in professional services and fast moves in fintech.
Bidders’ screen test of ITV is a reheated repeat
Who’s up for an episode of ‘I’m an ITV shareholder, get me out of here’? Anyone who has invested in Britain’s biggest terrestrial commercial broadcaster since it was formed from the merger of Carlton and Granada in 2004 would be forgiven for tuning into that one.
Under Dame Carolyn McCall, chief executive since 2018, the company has found itself locked in a battle to avoid being stranded on the fringes of the revolution in media consumption. Its most recent results suggest some progress: digital revenues, largely generated by the ITVX streaming platform, and the profitable Studios division (which made ‘Mr Bates vs the Post Office’) now account for more than half of group revenues.
That shift doesn’t in itself provide an answer to the question occupying shareholders’ minds, though, which is whether ITV plc’s composition can make sense for much longer.
The company now has a market value of little more than £2.5bn (although it was given a substantial jolt on Monday by my scoop at the weekend that potential predators were again circling).
Analysts and industry executives believe the production arm alone would fetch a sum similar to that in an auction. That probably explains why suitors are running the numbers – as indeed they’ve done periodically ever since ITV’s creation.
The current round of analysis involves potential financial and strategic bidders including CVC Capital Partners, France’s Groupe TF1 and Mediawan, a production house backed by KKR. RedBird Capital, the recent acquirer of All3Media – in which ITV also expressed an interest – is another logical suitor for the production arm.
The absence of any confirmatory statement on Monday morning underlines the point I made at the weekend: that none of the work taking place at the moment amounts to a firm interest in making an offer. Well-placed sources tell me, though, that at least two of the aforementioned parties have held talks in recent weeks about teaming up to bid.
Like most of the forthcoming terrestrial TV schedule, reheated repeats will be commonplace in the coming weeks. Expect more of the same in relation to an ITV takeover early in 2025.
No accounting for taste in sector’s deal flurry
There’s no accounting for taste. Take the sudden flurry of deals in Britain’s professional services sector. The biggest, confirmed last week, is Cinven’s acquisition of a majority stake in Grant Thornton UK – believed to be at a valuation of about £1.5bn.
Cinven saw off competition from several rivals, the most notable of which was New Mountain Capital, which holds a stake in Grant Thornton’s US operations.
The logical conclusion to draw from partners’ choice of investor is their desire to retain independence from their transatlantic colleagues.
It may also offer a less complex path in relation to client conflicts, according to one GT UK employee, although private equity investment in audit firms also brings with it plenty of potential for those.
“The value [Cinven places] on culture and their articulation of how they could reinforce and enhance our commitment to audit quality was a key differentiator in our decision to partner with them,” gushed Malcolm Gomersall, GT UK’s chief executive.
In the race to steal market share from the big four, challenger firms have traded far beyond capacity, with the inevitable consequences for audit quality and a litany of jaw-dropping fines.
It’s hardly surprising that the Financial Reporting Council has fired a warning shot across accountants’ bows, saying that private capital injections into their businesses would carry “important risks that will need to be managed”.
The FRC’s stance, as it transitions into a new statutory regulator, will be key to this. As a multidisciplinary firm, Grant Thornton will no doubt be juiced to extract more handsome returns from its advisory business; a more draconian approach from its watchdog could yet have a bearing on the merits of Cinven’s industry-changing swoop.
Fintech’s pace of change means exit for Britton
Things are supposed to move quickly in an industry like fintech – but not this quickly. Less than two years after being set up, I hear there’s an impending change of leadership at the hitherto government-funded Centre for Finance, Innovation and Technology (CFIT).
Ezechi Britton, whose appointment as CFIT’s inaugural chief executive was only announced in February 2023, has resigned, according to a statement quietly slipped out this week.
An email from CFIT’s chair, Charlotte Crosswell, to stakeholders paid tribute to Britton’s work, saying it was natural for him to go as the body seeks to scale its operations and praising recent acknowledgment of its work by the chancellor.
“This is a pivotal and exciting time for CFIT as we…prepare to support the opportunities arising from the Industrial Strategy – enhancing the UK’s position as a global leader in financial innovation,” she wrote.
Sceptics retain some doubts, however, about CFIT’s potential and its future funding. At the government spending review in 2021, the Treasury wrote a £5m cheque to establish the body, with the City of London Corporation contributing an additional £500,000 – but with private sector funding expected to flow afterwards.
I’m told there’s progress towards that, with an announcement anticipated next year. Nevertheless, the impatience of some industry figures implies more tensions – creative or otherwise – may lie ahead.