Sky says it’s going to pay £1.6 billion pounds to acquire the broadcasting and streaming platforms of ITV in a deal that will firmly establish it as the U.K.’s biggest commercial broadcaster.
Sky, which is owned by the U.S. telecommunications firm Comcast, will initially pay £1.2 billion in cash to purchase ITV’s media and entertainment businesses. This includes all of its free-to-air channels and also the ITVX streaming platform. The rest of the money will be paid after certain milestones based on advertising revenues are reached.
According to Sky's announcement, the acquisition will give it the opportunity to create a “U.K.-focused national streaming champion” that will be in a much better position to compete with American streamers like Netflix, Amazon Prime Video, Disney and YouTube.
Comcast will also sell its Love Productions arm, which produces shows such as The Piano and The Great British Bake Off, to ITV for £200 million. On the other hand, the deal doesn’t include ITV Studios, the production company, which produces programmes such as I’m a Celebrity… Get Me Out of Here! and Mr Bates vs the Post Office. ITV Studios will remain a standalone and publicly-traded company.
Sky said ITV will continue to work with ITV Studios, however. It has committed to spending £2.1 billion on programming that will be made by the business as part of an ongoing partnership, with that commitment safeguarding the future of iconic shows such as Coronation Street and Love Island.
Diana Strong, chief executive of Sky, also sought to reassure Brits that “fan favourites” such as Corrie and live sports such as coverage of the Six Nations rugby tournament won’t be put behind a paywall. “All of those shows will remain on the free ITV service,” she insisted. “Coronation Street, Emmerdale, Love Island, I’m a Celebrity, Ant and Dec. There is no plan or intention of putting those loved shows behind a paywall. We think that is an important commitment we are making.”
Indeed, Strong promised that Sky will do the opposite and make more live sports free-to-air once the deal concludes.
ITV said in its own announcement that the deal will allow it to return £950 million to shareholders, with a further £65 million being put into an escrow account for employees entitled to pensions.
ITV Chairperson Andrew Cosslett said the broadcaster has played a “cherished role” in the public life of Britain for more than seven decades. “At a time of rapid change in the industry, it is right that we now secure ITV’s crucial role as a public service broadcaster and this transaction achieves this,” he promised.
It is at this point we should note that the acquisition is far from certain to go ahead, as a whole bunch of people are expected to scrutinise the deal before giving their necessary approval. The regulatory approval process is expected to take between 12 and 18 months, with the Competition and Markets Authority and Ofcom (the market watchdog and telecoms watchdog, respectively) both set to take an extremely close look at the terms of the deal.
Ofcom will no doubt have piercing questions it needs answering about Sky’s plans for ITN, which is ITV’s news organisation, given that Sky News operation is one of its major competitors. Meanwhile the CMA will be looking it the deal’s overall impact on the U.K. TV market and whether or not it would result in a “substantial lessening of competition,” especially with regards to advertising.
In addition, the government itself may also take a look at the proposed transaction. It has the power to block the deal under the Enterprise Act, which enables it to intervene when “wider public interests must be considered, including plurality of media ownership and the need for a wide range of high-quality broadcasting.”
While any one of those organisations could throw a spanner in the works, Sir Peter Bazalgette, who is a shareholder in ITV and served as its chairman from 2016 to 2022, said it’s absolutely essential that the deal gets done.
"If we don't see consolidation between domestic broadcasters, we won't have any in 20 years' time and it's the same for all the European countries because of the competition from the streamers,” Bazalgette said. “It's a good deal for viewers because it sustains, will sustain, ITV's investment -- as its obligations are as a public service broadcaster -- in international news, national news, regional news and all the programs that its viewers love.”
In case the deal doesn’t get done, Sky has agreed to pay a termination fee of £80 million to ITV. For its part, ITV would also have to pay £11.5 million if regulators don’t allow it to acquire the Love Productions studio.
