After yesterday’s decline of 8.6% (October 22), ITV (LSE:ITV) share price is currently 75% lower than it was 10 years ago. This happened after the broadcaster’s largest shareholder, Global Freedomsold half of its shares for approximately £135 million.

Why did ITV go bust?

The share price fall puts ITV at 69p. Given this is a 52-week low, it’s perhaps a bit surprising that Liberty has now decided to cut its 10% stake. After all, he kept it for a decade.

As stated by Dan Coatsworth, the company’s director of markets AJ Bellemphasizes: “Investors may wonder why Liberty Global decided to sell half of its position at a time when the stock was trading near its lowest level in six months. Many large investors wait for a high share price before selling it“

To be fair, ITV notes that Liberty had “previously reported intention to sell assets unrelated to the core business“So it doesn’t look like too much of a problem.

Purpose of the acquisition

There has been speculation about the possibility of taking over ITV for years. The studio’s low valuation and attractive arm that creates content for other broadcasters and streamers lend credence to these rumors.

Perhaps the sale of Liberty will lend a hand pave the way for the sale or breakup of ITV. This could unlock some value for shareholders, especially as the media group is reporting earnings just eight times forecast.

On the other hand, would anyone want the whole thing or just a fragment of the Studio? I can’t imagine it Netflix (NASDAQ:NFLX) would be interested in linear television and streaming platform ITXVX. Probably just Studios and a back catalog of content would like it.

But who would want to invest in the remainder if it remained public? Without the Studios unit, I personally would not be interested in ITV.

I’m losing my meaning

It’s worth dwelling on because it’s probably ITV’s biggest rival at the moment FTSE250 the company has fully embraced streaming.

In 2015, Netflix reported revenue of $6.8 billion and operating profit of $306 million. Meanwhile, ITV’s total external revenues were £2.9 billion and adjusted EBITA (earnings before interest, tax, depreciation and amortization) was £865 million. ITV was therefore much more profitable.

However, last year the situation was completely reversed. Netflix’s operating profit was approximately $10.4 billion on revenue of $39 billion. ITV’s external revenues were £3.5 billion, but adjusted EBITA fell to just £542 million.

These figures explain both the 75% decline in the ITV share price and the 1,000% rise in Netflix. Essentially, the streaming giant has torn viewers away from the former, and I don’t expect things to reverse much.

Nuance

Having said that, the reality is admittedly more nuanced as ITV actually distributes content to Netflix and other global streamers. For example, studies done Devil’s hour Down Amazon Prime Video i Escape for Netflix.

Studios’ growing arm is why I think ITV shares are probably undervalued. Currently, investors are being offered a well-covered dividend yield of 7.3% so that they can safely wait until this value is potentially realized. Therefore, income investors may consider purchasing the stock.

For me, though, I prefer Netflix stock. It’s true that its earnings next year are much higher than 34 times, which increases the risk if earnings become smaller. However, the streaming leader’s growth potential – especially from digital advertising – seems much more attractive.