*

Banijay in early stage talks about a combination with

ITV's

Studios, sources say

*

Ongoing talks with RedBird IMI over a All3Media-ITV

Studios deal

hit impasse, sources say

*

ITV has been long been subject to takeover speculation

(Adds share price in paragraph 4)

By Amy-Jo Crowley, Hadeel Al Sayegh and Paul Sandle

LONDON, April 27 (Reuters) - Banijay, the

French TV production group behind "Big Brother" and backed by

the Arnault family, has held discussions about a possible offer

for British broadcaster ITV's studio business, two people

familiar with the matter told Reuters.

Banijay has also explored a full takeover of ITV,

which would involve securing investment from a third party, the

first person said.

The news, first reported by the Financial Times on Sunday,

comes as ongoing talks between ITV and RedBird IMI, the owner of

All3Media, about merging their studios have hit a stumbling

block, the people and third person said.

Shares in ITV were down 3.5% in afternoon trade.

Merging ITV Studios with either group would create a

European production powerhouse, which would have increased

strength in dealing with broadcasters and streamers such as

Netflix ( NFLX ) and Disney+ that are increasingly dominating the market.

The sources cautioned that Banijay's interest in ITV was at

an early stage and no deal was guaranteed.

The discussions have centred on merging the "Big Brother",

"Survivor" and "Black Mirror" producer with ITV Studios, two of

the people said.

Similar plans were abandoned in 2023 as Banijay wanted

control of the business, which was a stumbling block for a deal,

Reuters reported at the time. Banijay would seek control of ITV

Studios in a deal with ITV, the first person told Reuters.

Spokespeople for ITV, Banijay and RedBird IMI declined to

comment.

Meanwhile, the talks with RedBird IMI, reported by Reuters

in January, have recently hit an impasse over governance and

valuation, the sources said.

While RedBird IMI is open to being a minority shareholder,

it would like more governance rights such as board

representation, the third person said.

Production companies have come under pressure from

reductions in budgets from ad-funded broadcasters and a drop in

commissions from some streamers. This is prompting studio groups

to consider mergers to cut costs and pool resources.

ITV, Britain's biggest free-to-air commercial broadcaster,

has been the subject of takeover speculation for years, but no

deal has materialised.

ITV is also continuing to hold discussions with other

interested parties, two of the people said. It could eventually

decide to run a formal process due to the level of interest in

Studios, the first person said.

ITV's Studio business has been valued at as much as 3

billion pounds ($3.7 billion), according to analysts. The other

half of the business - Media and Entertainment - includes its

broadcast channels and streaming service ITVX.

Only about 9% of Banijay's shares are freely traded in

Amsterdam. They indicate it has a market value of about 3.6

billion euros.

A group that includes the Arnaults' Financière Agache and

Tikehau Capital owns about 45% of Banijay, while Vivendi owns

about 19%, according to its website.

ITV CEO Carolyn McCall in March said there had been

speculation about all studios businesses, including rivals

Banijay and Fremantle. RTL's Freemantle have explored merger

options to cut costs and pool resources, Reuters has reported.