ITV is selling its media and entertainment divisions to Sky in a £1.6bn deal that the companies say will create a strong rival to global streaming giants. The sale includes ITV’s broadcast channels and its ITVX streaming service, with Sky’s chief executive Dana Strong calling it “a defining moment for British media”.
It is one of the biggest takeovers in British media history, with American-owned Comcast – which owns Sky – having started takeover talks in November last year.
ITV’s studio arm, which makes popular programmes such as Love Island and I’m a Celebrity… Get Me Out of Here, is not included in the deal.
The deal means Sky will get access to millions more viewers, and as well as scale and prominence on a free-to-air platform.
Viewers are unlikely to notice any difference initially. The takeover will not lead to ITV’s shows being moved behind a paywall for now as ITV is required by law to provide a free-to-air service until at least 2034 under its public service broadcasting licence.
In a statement, Sky Group said there would be no immediate change to popular shows.
“The UK media market is undergoing a profound and rapid transformation, and as competition for audiences intensifies, scale matters more than ever in order to compete with global streaming giants and YouTube in the UK,” Sky said .
“Viewers will continue to enjoy the shows they know and love, such as Coronation Street, Emmerdale, Love Island, I’m a Celebrity… Get Me Out of Here!, This Morning, Loose Women, Lorraine and News at Ten – alongside major live sporting events.”
Former ITV chairman Sir Peter Bazalgette, who owns shares in ITV, said the deal was “essential” for the survival of the broadcasters.
“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,” he told the BBC’s Today programme.
“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 programmes that its viewers love”, he said.
Sir Peter added that consolidating channels in the UK would put them in a better position to compete against global players, as the sheer size of the US media market gave its firms huge financial firepower.
The takeover is still subject to approval from regulators, but when it is completed ITV Studios will become a standalone business.
Under the terms of the deal, ITV will receive £1.2bn in cash and Sky’s Love Productions business, whose shows include Great British Bake Off, which is valued at £200m. ITV will also get a further £200m in 2028 if it meets advertising revenue targets.
Sky said it had also agreed to spend £2.1bn on content from ITV Studios over a five-year period.
Susannah Streeter, chief investment strategist at Wealth Club, said the deal would be a “significant step in the reshaping of Europe’s media landscape”.
“Traditional broadcasters are having to change tactics fast in the battle for audiences whose attention is increasingly fragmented across streaming platforms, social media and online video, making advertising revenues harder to sustain,” she said.
By BBC News
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