Hedge fund snaps up stake in Love Island maker ITV

By Louis Goss

A hedge fund has bought a 5% stake in the U.K.'s largest commercial television broadcaster ITV, as the broadcaster struggles against a slump in the advertising market that has pummeled its share price in recent years.

Silchester International Investors LLP, whose offices sit at the heart of Mayfair, just minutes from both Berkeley Square and Saville Row, has acquired an almost GBP120 million ($152 million) holding in ITV, regulatory filings show.

Shares in ITV (UK:ITV) fell 1% on Tuesday having lost 33% of their value over the previous year, as a slump in the advertising market has hit the free-to-air broadcaster's revenue.

Silchester, which was started in 1994, describes itself as "specializing in international equity investment on behalf of institutional investors" and says its aims to generate "attractive long term return through investment in quoted international equities."

In outlining its investment philosophy, the hedge fund, which has previously built stakes in major British companies including Tesco (UK:TSCO) and GSK (GSK), says it "seeks to identify companies capable of increasing earnings, assets and dividends by their own efforts."

The publicity-shy hedge fund, which was set up by former Morgan Stanley banker Stephen Butt, has previously invested in some of the world's major television broadcasters and media companies, including Luxembourg's RTL Group (XE:RRTL) and Hong Kong's TVB.

In 2022, Silchester was revealed to have become WPP's (UK:WPP) third-largest investor, having built a GBP500 million stake in the British advertising giant, in investments that led to speculation the fund would push for a break-up of the multinational communications firm.

The Mayfair hedge fund derives its name from an ancient settlement in Berkshire that was founded by a Celtic tribe during the Iron Age before being taken over by the Romans in 45 AD.

Silchester's acquisition makes it ITV's seventh largest shareholder, behind telecommunications company Liberty Global (LBTYA) (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, which launched as the U.K.'s first privately-owned television broadcaster in 1955, generates revenue by selling advertisement on TV and also by producing shows that it sells to broadcasters including Amazon Prime and the BBC.

The London company has suffered financially from a drop in spending on television adverts, as viewers have turned away from watching traditional TV broadcasts in switching to using streaming services including Netflix and Amazon Prime.

ITV has, however, seen revenues from its studio business increase in recent years, on the back of the popularity of shows including Love Island and Come Dine With Me.

Earlier this year, ITV's drama Mr Bates vs. the Post Office, which covers the U.K.'s horizon post office scandal, became the broadcaster's most successful new drama in a decade, after drawing in 14.8 million viewers.

A spokesperson for Silchester International Investors declined to comment.

-Louis Goss

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02-13-24 0523ET

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