Sky eyes £1.6bn deal to acquire ITV’s broadcasting and streaming business

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'I Fought The Law'

Source: Hera Pictures / ITV

‘I Fought The Law’

The UK’s traditional broadcasting landscape could be set for its biggest upheaval in decades after it emerged that Sky wants to buy ITV’s streaming and network business.

ITV confirmed takeover talks with the satellite giant this morning (November 7) via a stock exchange statement. ITV said it is in “preliminary discussions regarding a possible sale of its M&E business to Sky for an enterprise value of £1.6bn”.

If the deal were to go through the merged company would own some major and complementary UK assets: Sky’s significant pay-TV business, including Sky Sports, and its Now streaming service as well ITV’s flagship free-to-air channel and the rapidly growing ITVX platform, which is on track to generate £750m annually by 2026.

ITV Studios, the £2bn production and distribution giant, is not part of the proposed acquisition. Should the deal proceed ITV Studios would remain owned by ITV as a listed entity, and would almost certainly attract suitors in its own right. The likes of All3Media-owner RedBirdIMI and Banijay Group having previously expressed interest in acquiring the business.

The future of ITV has been a source of speculation for some time. There has been a strong sense within the company that its share price significantly undervalued the business given its external annual revenues of almost £3.5bn and its adjusted EBITDA of £542m.

ITV’s group market capitalisation is around £2.7bn, yet the ITV Studios business alone would be worth circa £3.5bn if the same multiples were applied to it as RedBird paid for All3Media. Given that discrepancy, Sky’s £1.6bn approach could look attractive to ITV’s shareholders.

The approach for ITV is thought to have come direct from Sky but is ultimately being driven by the latter’s parent company, Comcast.

The path for its approach became clearer late last month when ITV’s biggest shareholder, cable business Liberty Global, halved its stake to circa 5%.

There could be regulatory hurdles to a deal though: Sky and ITV run two of the UK’s three TV ad sales houses and their merger would dwarf their only other rival, Channel 4. However, the relative value of the Google and Meta advertising businesses in the UK far exceed that of a combined Sky and ITV entity, by as much as nine times based on Advertising Association figures.

Were ITV’s streaming and broadcasting businesses to be separated from ITV Studios it is likely that both elements would want to secure long-term deals for the latter’s most important internal programming assets such as the soaps, daytime programming and flagship shows such as I’m a Celebrity and Love Island.

If Sky acquired ITV’s broadcasting assets it would assume all the obligations that come with the latter’s public service broadcasting (PSB) licence around the provision of news (national and local), originations during peaktime and working with independent producers. ITV renewed its PSB licence for 10 years in 2024 and has a ten-year contract with ITN for the provision of news output.

Alongside Sky’s UK, Irish and Italian operations (the German business was sold to RTL in June for €150m), Comcast owns US internet giant Xfinity and the NBC Universal media empire.

The latter includes the NBC network and vast film assets such as Universal Pictures and DreamWorks Animation. Peacock is Comcast’s streaming service and its Universal Studios Group its TV production giant. International division Universal International Studios houses UK assets Carnival Films, while Universal Television Alternative Studio (UTAS) houses the UTAS UK, into which production label Monkey was folded earlier this year.