By Amy-Jo Crowley

LONDON (Reuters) – RTL Group, Europe’s largest broadcaster, is exploring options for its Fremantle production unit, including a merger, given a broader cutback in TV commissioning across the industry, two people familiar with the matter told Reuters.

RTL, majority-owned by German media group Bertelsmann, is considering finding a merger partner for the “Got Talent” franchise owner, which could involve selling a minority stake to another production group or private equity firm with production assets, the sources said. It wants to retain majority control of the business, the sources added.

Fremantle, whose hits include drama “Normal People”, has been valued at around 1.9 billion euros ($2.05 billion), according to analyst reports.

The sources, who requested not to be identified because the matter is private, said deliberations were in the early stages and no deal was guaranteed.

A spokesperson for RTL said in an emailed statement that expanding its global content business Fremantle, “is one of RTL Group’s strategic priorities – as evidenced by the series of recent acquisitions,” and declined to comment further.

Fremantle’s acquisitions this year include French production group Asacha Media Group and Singapore’s Beach House Pictures.

Bertelsmann referred requests for comment to RTL.

Inflation and a downturn in advertising hit traditional broadcasters’ production budgets, while the boost from streaming services has started to fade as the industry emerges from a bumper period of high-quality commissioning analysts have labelled as “peak television.

The amount spent on commissioning by UK-based broadcasters fell by more than 10% last year, according to industry body Pact.

The cutbacks have prompted production companies to look at consolidation to cut costs and pool resources, the people said.

Logical partners for Fremantle could include RedBird IMI, which acquired All3Media earlier this year for 1.15 billion pounds ($1.49 billion), and private equity firm Providence, the first person said. Providence, which declined to comment, is a shareholder in North Road Company, formed by Hollywood veteran Peter Chernin. A spokesperson for RedBird IMI declined to comment.

However, potential bidders may want majority control of Fremantle, which could be a stumbling block to a deal, the first person said.

Fremantle is one of the largest producers of scripted and unscripted shows, providing for a variety of broadcasters and streamers worldwide including ITV, Amazon and Disney.

Revenue at Fremantle decreased to 957 million euros in the first half of 2024, according to its latest results. It is targeting full-year revenue of 3 billion euros by 2026 by investing across entertainment, drama and film, and documentaries organically and via acquisitions.

($1 = 0.9280 euros)

($1 = 0.7710 pounds)

(Reporting by Amy-Jo Crowley with additional reporting by Mathieu Rosemain and Paul Sandle. Editing by Anousha Sakoui and Barbara Lewis)