Shares in ITV PLC (LSE:ITV) fell in early trading before climbing almost 4% on Thursday as a mixed trading quarter was offset by news that the broadcaster remains in active discussions with Sky over a possible sale of its Media & Entertainment (M&E) business.
The update on the potential £1.6 billion deal had been closely watched by investors amid concerns that talks had hit the buffers.
Victoria Scholar, head of investment at Interactive Investor, said the announcement reignited hopes that a deal could still be on the table.
She noted that a sale would be positive for shareholders, generating a significant cash return and shifting the business away from declining linear television towards its more successful content production arm.
ITV's shares remain at around a 15% premium to the level seen before the Sky discussions were first disclosed in November 2025, though the stock is down 7% year to date.
The company reported group total external revenue up 1% in the three months to 31 March, but total revenue was flat year on year.
Advertising revenue fell 1.5%, though that was better than guidance.
And ITV expects a significant improvement, forecasting ad income will be up around 10% in the second quarter, buoyed by demand around the men's football World Cup, which begins in June and where the group will be showing more matches at peak times.
ITV Studios was the standout performer, delivering total revenue growth of 4% on the back of an 8% jump in external revenue, driven by deliveries to global streaming platforms including Skyscraper Live for Netflix, Rivals series two for Disney+ and Love Island US: Beyond the Villa series two for Peacock.
Internal revenue at the Studios arm fell 7%, reflecting lower soap and daytime output following previously announced scheduling changes.
The M&E division saw revenue decline 2%, though 12% growth in digital revenue largely offset the fall in linear advertising.
Digital advertising revenue rose 14%, supported by what ITV described as a record-breaking start to the year for ITVX, with total streaming hours up 13%.
Scholar noted that while ITV has struggled in recent years with the decline in traditional broadcasting and its impact on advertising demand, the company has been working to strengthen its digital revenues.
ITV Studios margins are expected to come in at the lower end of the 13% to 15% target range this year, reflecting revenue mix, with profit weighted to the second half as large scripted deliveries and high-margin licensing deals land later in the year.
The stock, up 1% on Thursday, has been jumping in and out of the FTSE 100 in recent times, reflecting wider investor uncertainty about the outlook for traditional broadcasters.