The long-rumoured deal for Sky to buy ITV’s broadcasting and streaming arm and create the UK’s biggest commercial broadcaster is finally offical, with a £1.6bn price tag attached.
Sky, owned by the US telecoms company Comcast, will pay £1.2bn in cash initially for ITV’s media and entertainment business, including its free-to-air TV channels in the UK and ITVX streaming platform, with further payments depending on 2027 advertising revenues.
Sky hopes the deal will help it compete for viewers with US streaming giants like Netflix and Amazon.
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As a further part of the transaction, Comcast will sell its Love Productions business, which makes The Great British Bake Off and The Piano, to ITV for £200m.
Sky and ITV have been in talks for months to hammer out the complicated deal.
It does not include the programme-making arm ITV Studios, one of the world’s biggest production companies, which has made shows including I’m a Celebrity… and the hit drama Mr Bates vs the Post Office. ITV Studios will remain as a stand-alone company listed on the London Stock Exchange.
Sky has committed to spending at least £2.1bn between 2028 and 2032 on the studios business as part of a long-term strategic partnership, safeguarding the future of popular programmes such as Coronation Street and Love Island, and Northern ITV labels such as Quay Street and Two Four.
The board expects to return £950m to ITV shareholders after completion of the deal, and a further £65m will be put into escrow for the benefit of the ITV pension scheme.
Dana Strong, Sky’s chief executive, said: “We have huge respect for the transformation the ITV team has delivered, particularly its successful move into streaming through ITVX, which has brought fantastic British content to millions of viewers across the UK.”
Andrew Cosslett, ITV’s chair, added: “For over seven decades, ITV has played an important and cherished role in the public life of the nation.
“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.”
Sky has agreed to pay a break fee of £80m if the deal does not get regulatory approval. ITV would have to pay a break fee £11.5m if it does not get the nod from regulators for its acquisition of Love Productions.
The takeover deal is expected to attract scrutiny from the UK’s Competition and Markets Authority and the telecoms regulator, Ofcom, as well as potentially result in job losses at ITV.
Ofcom is likely to examine particular concerns about the owner of Sky News taking ITV’s stake in ITN, the production company behind ITV News, Channel 4 News and 5 News.
Last week, Sky owner Comcast said it will spin off its media operation, which includes Sky and the Hollywood giant NBCUniversal, into a separate publicly listed company.
The move comes eight years after the US group, which said the separation will take a year to complete, acquired Sky’s European operations for £31bn.
