Sky has confirmed it will takeover ITV’s broadcasting arm for £1.6bn, in a move the media giant says will safeguard its role as a public service broadcaster.
The US-owned broadcaster said on Monday it will pay £1.6bn in total for ITV Media and Entertainment, which include its free-to-air TV channels in the UK and the ITVX streaming platform.
The deal will include £1.2bn in cash up front, a further £200m in cash to be paid out in 2028, and the £200m sale to ITV Studios of Love Productions, the makers of the Great British Bakeoff.
Sky said that viewers’ “favourite” ITV shows will continue to be available free of charge, and affirmed that ITV’s commitments to national and regional news are “safeguarded” under its license.
“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 with ITV’s Media and Entertainment division combining with Sky to create a UK champion with the scale and resources to better compete with global streaming platforms,” ITV chairman Andrew Cosslett said.
As part of the deal, Sky will become an indirect 20 per cent shareholder in ITN, the independent production company which supplies news bulletins for ITV, Channel 4 and Channel 5.
Shareholders eye up £950m returns
The acquisition comes as Comcast, Sky’s owner, is plotting to spin off its media businesses – including Sky – to form the separately-listed NBCUniversal.
Both Sky and ITV Media and Entertainment will become part of NCBUniversal once the merger is completed in the second half of next year, the company said.
The broadcaster said that ITV’s additional £200m cash will only be paid out if ITV generates more than £1.7bn in advertising revenue next year.
The process of spinning off ITV’s broadcasting arm will cost about £185m over the next three to four years, the firm said.
The board of ITV, which is listed on the FTSE 250, said it expects to return about £950m to shareholders following the completion of the deal.
“ITV Studios will be well positioned to deliver long-term value to its shareholders through a combination of above-market profitable organic revenue growth and attractive returns to shareholders,” chief executive Carolyn McCall said.
£2bn for Corrie and Love Island
In the leadup to the deal, Sky had committed to spending £2bn on ITV’s studios business, in a move which it said would protect beloved British shows like Coronation Street and Love Island.
Dana Strong, Sky’s chief executive, said: “This is a defining moment for British media and an opportunity to build a stronger future for two of the UK’s most loved and trusted brands.
“ITV will remain a public service broadcaster at the heart of British life, and we’re excited about the future we can build together.”
In recent years, domestic broadcasters like ITV have faced intense competition from US streaming giants like Netflix and Amazon Prime Video.
ITV and the BBC slashed their spending on big-budget TV shows to the lowest level in nearly a decade last year, just as US rivals ploughed hundreds of millions into British drama, according to the British Film Institute.
Sky aims to use its ITV merger to create a UK-focused streaming giant which it says will attract 16m viewers every month.
