Is ITV Selling Its TV Business to Sky?

ITV is reportedly in preliminary discussions to sell its Media and Entertainment division, including its TV channels and streaming service ITV X, to Sky for £1.6 billion. This potential deal comes amid increasing competition from streaming platforms like Netflix and Disney+, and would not include ITV's production arm, ITV Studios. Media analysts suggest that while the merger could lead to a 70% share of the UK TV advertising market, the unique circumstances of the television landscape may lead regulators to consider the acquisition as a necessary move for survival.

Last updated: 12 October 2023 (BST)

What’s happening now

ITV's discussions with Sky are at a preliminary stage and centre on the sale of ITV’s Media and Entertainment division, which is a significant part of ITV’s operations. This division includes various TV channels and the ITV X streaming service, both of which are under increasing pressure from the booming popularity of streaming platforms such as Netflix and Disney+. The move reflects ITV's strategy to adapt to a changing media landscape where traditional television is facing existential challenges due to shifting viewer habits and advertising revenues.

Key takeaways

ITV is in talks to sell its Media and Entertainment division to Sky for £1.6 billion.
The deal would not include ITV Studios, which produces popular shows.
Analysts warn the merger could give Sky and ITV over 70% of the UK TV advertising market.
ITV has forecasted a 9% drop in advertising revenue in late 2025, signalling caution among advertisers.

Timeline: how we got here

The media landscape has been rapidly evolving over the past few years. Here is a brief timeline of key events leading to the current situation:

2018: Comcast acquires Sky from Rupert Murdoch, positioning itself as a major player in the global media market.
2020: ITV launches ITV X, its streaming service, to compete with established platforms.
2022: Streaming subscriptions surge, leading to a decline in traditional TV viewership.
October 2023: ITV enters preliminary discussions with Sky regarding a £1.6 billion sale of its Media and Entertainment division.

What’s new vs what’s known

New today/this week

The latest development is ITV's confirmation of preliminary discussions with Sky regarding the potential sale of its Media and Entertainment division. Analysts have noted that this move might be viewed as a "rescue deal" due to the volatile state of the traditional TV market.

What was already established

Prior to the announcement, ITV had been grappling with declining advertising revenues, forecasting a 9% drop for the last quarter of 2025. The competitive pressure from streaming services has been well-documented, with increasing numbers of viewers shifting away from traditional TV to on-demand platforms.

Impact for the UK

Consumers and households

The potential merger could impact UK consumers significantly. With Sky and ITV potentially controlling a large portion of the TV advertising market, viewers may see changes in the type and volume of advertising content. Additionally, the future of ITV X as a competitive streaming service could be influenced by the merger.

Businesses and jobs

For businesses, particularly those in the advertising sector, the merger could reshape the landscape of TV advertising. A combined entity might lead to a more consolidated market, affecting how brands negotiate advertising space. Job security within both companies may also be a consideration, especially if the merger leads to redundancies.

Policy and regulation

The proposed deal raises regulatory questions, especially concerning market dominance. The Competition and Markets Authority (CMA) may scrutinise the merger due to the significant control over advertising it would create. However, analysts suggest that the current uncertainties in the television industry may lead regulators to take a more lenient stance.

Numbers that matter

£1.6 billion: Proposed sale price for ITV's Media and Entertainment division.
9%: Expected decrease in ITV's advertising revenue for the last quarter of 2025.
70%: Potential combined market share of Sky and ITV in UK TV advertising.
3: Major streaming competitors ITV faces: Netflix, Disney+, and Amazon Prime.
1: ITV's streaming service, ITV X, launched to compete with leading platforms.

Definitions and jargon buster

ITV: Independent Television, a major UK broadcaster known for its television channels and programming.
Sky: A British media and telecommunications company owned by US-based Comcast.
Media and Entertainment division: The segment of ITV that comprises its TV channels and streaming services.
ITV Studios: The production arm of ITV that creates popular television programmes.
Advertising revenue: Income generated from selling advertising space on television channels and platforms.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, stakeholders will be watching closely for updates on the discussions between ITV and Sky. Regulatory responses and any public statements from either company will be crucial in determining the viability of the sale.

Medium term (1–6 months)

Over the next few months, ITV's financial performance will be scrutinised, particularly in light of its advertising revenue forecast. Any shifts in viewer behaviour or advertising trends could impact the perceived value of the deal.

Signals to watch

Public announcements from ITV or Sky regarding the status of negotiations.
Regulatory feedback from the CMA on potential market dominance concerns.
Changes in advertising revenue forecasts from ITV and industry analysts.

Practical guidance

Do

Stay informed about developments in the ITV and Sky discussions.
Monitor ITV's advertising revenue performance and market trends.
Consider the implications of increased market consolidation in the media landscape.

Don’t

Assume the deal will go through without regulatory scrutiny.
Ignore the potential impact on programming quality and viewer choice.
Overlook the importance of streaming platforms in shaping the future of television.

Checklist

Follow news updates on ITV and Sky's negotiations.
Evaluate personal viewing habits and how they may change.
Review advertising options if you're a business looking to partner with ITV or Sky.
Consider subscribing to ITV X to support the platform amidst changes.
Keep an eye on regulatory developments that could affect the media landscape.

Risks, caveats, and uncertainties

The potential merger is fraught with uncertainties, particularly regarding regulatory approval. The significant market share that Sky and ITV would control raises concerns about monopolistic practices. Additionally, external factors such as changing viewer preferences and economic conditions could further complicate the deal. The situation remains fluid, and stakeholders should remain cautious in their assessments.

Bottom line

The proposed sale of ITV’s Media and Entertainment division to Sky for £1.6 billion highlights the ongoing challenges facing traditional television in the face of rising streaming services. While the deal could consolidate market power, it also raises significant regulatory concerns that may influence its outcome. Observers should stay alert to developments, as the ramifications will likely shape the future of broadcasting in the UK.

FAQs

What does ITV's potential sale to Sky mean for viewers?

The potential sale could lead to changes in the types of programming and advertising viewers experience, as Sky and ITV would hold a significant share of the advertising market.

Will ITV Studios be affected by this sale?

No, ITV Studios, which produces popular shows, is not included in the potential sale to Sky.

What are the regulatory implications of this merger?

The merger could face scrutiny from the Competition and Markets Authority (CMA) due to concerns about market dominance, which may impact its approval.