Sky’s £1.6 billion swoop on ITV’s broadcasting arm is expected to come with a £2 billion spending commitment to the FTSE 250 group’s remaining studios business, a guarantee designed to keep Coronation Street and other staples on air for at least five years.
Sky, which is owned by the American media giant Comcast, has been circling ITV’s media and entertainment division, its linear channels plus the streaming service ITVX, since last year. After months of wrangling over the finer points, the two sides now appear close to terms, and people familiar with the talks expect an announcement as early as the first week of July. The companies first confirmed they were in preliminary discussions over the £1.6 billion sale earlier this year.
ITV Studios, which generated a little over half of the group’s £4.1 billion of revenue last year, is not part of the transaction and will stay listed on the London Stock Exchange. Much of the negotiation has turned on the practicalities of separating ITV’s various arms cleanly.
ITV traces its history to 1955, when it was launched to break the BBC’s grip on British television. Today its production side spans dozens of individual companies. Their clients include rival broadcasters and the global streamers, but they also hold contracts with ITV’s own channels and ITVX worth hundreds of millions of pounds a year.
It is understood that, under the terms now on the table, Sky has agreed to commit £2 billion to ITV Studios over five years once the deal completes, giving the production business firmer ground beneath it as a standalone public company. The arrangement would include contracts to make ITV’s biggest hits, among them Love Island and I’m a Celebrity… It would also secure the near-term future of the soaps Coronation Street and Emmerdale.
Coronation Street is still the country’s most-watched soap, drawing roughly four million viewers, according to ratings body Barb. A decade ago, however, audiences of eight million were not unusual, and some in the industry quietly worry about the programme’s longer-term direction.
The deal is also expected to see ITV Studios buy Love Productions, the maker of The Great British Bake Off, from Sky. On current production-sector multiples, that business could be worth around £200 million.
Dame Carolyn McCall, ITV’s long-serving chief executive, is expected to stay on at the studios business at least until the transaction has closed.
The Competition and Markets Authority (CMA) and the communications watchdog Ofcom will both scrutinise the deal closely, a process that could run for many months. Not long ago, a tie-up between Sky and ITV would have been almost unthinkable given their combined reach across British broadcasting. In 2008, the competition regulator ordered Sky to cut its 17.9 per cent stake in ITV to below 7.5 per cent.
Sky and ITV are nonetheless confident they can persuade regulators that the landscape has shifted. Their central argument is that the relevant competition is no longer other broadcasters but the digital giants, chief among them Google’s YouTube, that now dominate the advertising market. That shift has already reshaped how airtime is sold, with the three main commercial broadcasters recently teaming up to let smaller firms buy TV advertising in minutes.
Sky is expected to lean on lobbying support from Flint Global, the advisory firm until recently led by James Purnell, who has been chosen as chief of staff by the would-be prime minister Andy Burnham.
Ofcom is also likely to weigh concerns about the owner of Sky News taking on ITV’s 40 per cent holding in ITN, the company behind ITV News, Channel 4 News and 5 News.
Comcast acquired Sky in 2018 for $39 billion. The early years were bumpy, and in 2022 Comcast was forced to write down Sky’s value by $8.6 billion.
Sky, led by its American chief executive Dana Strong, believes buying ITV will strengthen its hand. There are costs to be shared, and ITV could offer a free-to-air shop window for Sky’s subscription products. The group, which plans to bring more free-to-air sport to British screens through ITV, wants to build a top-three commercial streamer in the UK, an ambition that pits it directly against the US streaming platforms ITV has long sought to counter.
ITV and Sky declined to comment.