Sky has confirmed it will acquire ITV's broadcasting division for up to £1.6bn, a move the media giant says will protect its position as a public service broadcaster. The US-owned broadcaster announced on Monday it will pay £1.6bn in total for ITV Media and Entertainment, which encompasses its free-to-air TV channels in the UK and the ITVX streaming platform.
Deal Structure and Payments
The deal comprises £1.2bn in cash upfront, a further £200m in cash to be paid in 2028, and the £200m sale to ITV Studios of Love Productions, the producers of the Great British Bake Off. Sky has assured viewers that their "favourite" ITV programmes will remain available free of charge, and confirmed that ITV's obligations to national and regional news are "safeguarded" under its licence, as reported by City AM.
Industry Reaction and Future Plans
"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," said Andrew Cosslett, Chairman of ITV.
The takeover comes as Comcast, Sky's parent company, is planning to spin off its media operations – including Sky – to establish the separately-listed NBCUniversal. Sky and ITV Media and Entertainment will be folded into NBCUniversal once the merger is finalised in the second half of next year, the company confirmed.
Financial Details and Shareholder Returns
The broadcaster stated that ITV's additional £200m cash payment will only be triggered if ITV generates in excess of £1.7bn in advertising revenue next year. The process of separating ITV's broadcasting division is expected to cost approximately £185m over the next three to four years, the company confirmed. The board of ITV, which is listed on the FTSE 250, anticipates returning around £950m to shareholders upon completion of the transaction.
Leadership Comments
"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," said chief executive Carolyn McCall. In the run-up to the deal, Sky had pledged to invest £2bn in ITV's studios business, in a move it said would safeguard much-loved British programmes such as 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."
