ITV has confirmed it is in preliminary discussions with Sky, owned by US media giant Comcast, regarding a potential £1.6 billion sale of its media and entertainment division. Such a deal would reshape the UK broadcasting landscape, positioning Sky as the nation's largest commercial broadcaster.
The talks, first reported by Bloomberg and subsequently confirmed by ITV to the London Stock Exchange, centre on a valuation of approximately £1.6 billion for the division, which includes debts. This arm encompasses ITV's terrestrial television channels and its streaming service, ITVX. The news sent ITV shares higher on Friday.
ITV stressed the early stage of negotiations, stating there is "no certainty as to the terms upon which any potential sale may be agreed or whether any transaction will take place." The company added that "A further announcement will be made in due course if appropriate."
Should an agreement be reached, it would face significant regulatory scrutiny from bodies such as the media regulator Ofcom and the competition regulator, the Competition and Markets Authority (CMA).
The proposed sale specifically targets ITV's media and entertainment assets. This would include its terrestrial channels, ITVX, and reportedly its 40 per cent stake in ITN, which produces news for ITV and Channel 4.
ITV's regional news operations, made in-house, would also be part of the deal. Crucially, ITV Studios, the production arm responsible for hits like Coronation Street, I’m A Celebrity… Get Me Out Of Here! and the popular drama Mr Bates vs The Post Office, is not included in these discussions.
ITV, a publicly listed company on the London Stock Exchange, has a diverse investor base, with Redwheel currently holding the largest single stake at 6 per cent.
International media firm Liberty Global had been the top shareholder until recently, reducing its stake to 5 per cent last month in a move that secured it £135 million.
For Sky, which is owned by US media giant Comcast (also parent to NBC and Universal Pictures, having acquired Sky from Rupert Murdoch for £30 billion in 2018), acquiring ITV's commercial broadcasting assets would significantly expand its reach to UK viewers beyond its existing pay-to-view platforms.
It would also grant it a formidable position in the TV advertising market, potentially covering around 70 per cent of all UK broadcast advertising.
ITV's interest in a sale follows a period of declining share value, with its shares hitting their lowest level since April earlier this week.
Shareholders reacted positively to the news, suggesting they view a sale as an opportunity to unlock value despite wider pressures in the broadcasting market.
Dan Coatsworth, head of markets at AJ Bell, commented: "The fact the media and entertainment arm has attracted a suitor, rather than Studios, is a surprise. There was a lot of uncertainty over whether anyone would want to relieve ITV of this ball and chain, so to see interest from Sky is Christmas come early for management and shareholders."
While ITV would likely remain a free-to-view terrestrial channel and Sky would maintain its pay-to-view model, analysts anticipate a "cross-pollination" of content.
Gill Hind, managing director and director of TV at Enders Analysis, suggested this could particularly impact streaming.
She told the PA news agency: "ITVX is growing but is still behind iPlayer and Channel 4 in terms of how many of the channels’ viewers use the streaming service.
“There could definitely be streamlining crossover opportunities with Sky able to make their programmes available to ITVX users who wouldn’t usually access their shows." She added that sports coverage could also see shared rights across public and paid-for channels.
The combined group's potential dominance in the TV advertising space is expected to be a particular focus of any regulatory process. Ms Hind noted that the outcome might hinge on "whether regulators include the likes YouTube, Google and Meta in their ad market considerations."
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