In early trading today, ITV's share price rose by around 5% due to excitement on the markets about the prospects of the deal, which would involve the two firms creating a joint venture to buy Endemol.
However, the share price slipped back to just above its previous closing level of 57.85p by lunchtime, after the commercial broadcaster failed to make an announcement to the stock market of its rumoured bid with Mediaset, as stipulated under the regulatory framework.
Asked about the takeover reports, an ITV spokesman said: "We do not comment on speculation."
Endemol, which is said to have a €2bn (£1.77bn) debt pile, helped score a ratings smash recently for Richard Desmond's Channel 5 with the relaunch of Celebrity Big Brother. The company is jointly owned by Mediaset, Dutch investment group Cyrte, and Goldman Sachs Capital Partners.
Talks are ongoing about a 'debt-for-equity' scheme for Endemol involving the three shareholders handing over some of their equity to lenders in exchange for reducing Endemol's loans.
The Guardian quoted an unnamed City source with knowledge of the negotiations as saying: "Mediaset are thinking about all options, all of the players involved with Endemol are, but at this point any story about any deals are completely speculative as no agreement has been reached between any debt owners or equity structure.
"There may have been some contact, but there is no way it would be anything at all advanced. As I understand it the creditors are far from agreement."
Separately, Endemol co-founder John De Mol, who has links to shareholder Cryte Investments, could return as chief executive or executive chairman of the firm as part of a new link with his Talpa Media. Endemol is currently searching for a new chief executive to replace Ynon Kreiz, who left the company in June.