ITV has agreed to sell its news and entertainment business to Sky for up to £1.6 billion, merging the UK’s two biggest commercial broadcasters in a bid for the scale needed to compete with US streaming giants such as Netflix and YouTube.
The deal, confirmed for the first time as the two broadcasters entered into talks over the future of ITV’s flagship channels and the ITVX broadcasting platform, includes a cash payment of £1.2 billion and ITV Studios’ £200 million acquisition of Sky’s Love Productions, the company behind Great Britain Bake Off.
The FTSE 250 broadcaster will also receive a bonus of up to £200 million if its advertising revenue reaches £1.7 billion next year, a figure largely in line with last year’s performance.
Under the terms of the agreement, ITV Studios will operate as a separate global content business, underpinned by a long-term supply agreement with ITV’s media and entertainment and Sky operations. That arrangement includes a minimum commitment to spend £2.1 billion on content between 2028 and 2032, securing the future of the production house which is widely regarded as an asset in the ITV portfolio. The studio arm makes programs for ITV and rival British broadcasters and American broadcasters.
Andrew Cosslett, chairman of ITV, said: “At a time of rapid change in the industry, it is right that we now protect ITV’s important role as a public service broadcaster and this transaction achieves this with ITV’s media and entertainment division joining Sky to create a UK champion with the scale and resources to better compete with global broadcasters.
The deal, which is expected to be completed in the second half of next year, will see around £950 million returned to shareholders. ITV will generate bank income of £1.05 billion after separation costs of £185 million. Shares in the broadcaster were up 0.9p, or 1.1 per cent, at 82.5p in early trading.
Most importantly for viewers, ITV and ITVX will remain free-to-air and will continue to carry fan favorites including Coronation Street, Emmerdale and Love Island. Under a ten-year public service broadcasting license renewed by Ofcom, ITV is required by law to provide a free-to-air service until the end of 2034.
Once the deal is complete, Sky will also take 20 per cent of ITN, the producer of Good Morning Britain, ITV News at Ten and regional London news. Sky said there would be no immediate impact on staff at either company, although “an integrated joint team will lead formal consultation on any future structures”.
The tie-up marks the latest reshaping of the UK media landscape under increasing pressure from global broadcasting. Sky, which provides television, broadcasting, broadband and mobile services to millions of customers across the UK and Europe, is owned by Comcast, the US media conglomerate which announced plans last month to spin off Sky and NBCUniversal into an independent, publicly listed media company that includes theme parks, film and television studios and the Peacock streaming service.
For SMEs, the integration of major commercial broadcasters can facilitate access to premium television advertising, building on the likes of Comcast’s Universal Ads platform, which allows small firms to buy ITV, Sky and Channel 4 airtime in minutes.
Dana Strong, Sky’s chief executive, described the deal as a “defining moment” in the British media. A conglomerate of this size would have faced huge regulatory hurdles, but the rise of YouTube and streaming services like Netflix, Amazon and Disney have left established broadcasters with no choice but to seek scale.
