ITV sells broadcasting arm to Sky for £1.6 billion in landmark deal

ITV PLC agreed to sell its media and entertainment division to Sky for as much as £1.6 billion, splitting the 71-year-old broadcaster in two and returning about £950 million to shareholders.

"Bringing Sky and ITV Media & Entertainment together combines the very best of free-to-air television, pay TV and streaming, ensuring viewers across the UK continue to enjoy outstanding British programming in a rapidly changing world," Dana Strong, group chief executive of Sky, said.

The consideration comprises £1.2 billion in cash at completion, the transfer of Love Productions — the maker of "The Great British Bake Off" valued at £200 million — and as much as £200 million in contingent payments tied to advertising revenue performance in fiscal 2027. Net cash proceeds after transaction and separation costs of roughly £185 million are projected at about £1.05 billion. ITV plans to use the proceeds to reduce ITV Studios' leverage to around 1.5 times net debt to EBITDA, then return about £950 million to shareholders, equivalent to 25 pence per share.

The deal reshapes British television at a time when traditional broadcasters are consolidating to compete with global streaming platforms. Sky, owned by Comcast Corp., will combine ITV's free-to-air channels and ITVX streaming service with its pay-TV and broadband operations, creating a business that accounts for about 20 percent of all UK in-home viewing — second only to the BBC and ahead of YouTube, according to Barb data. The combined entity will sit under NBCUniversal once Comcast's planned separation is complete.

ITV Studios to Stand Alone

ITV Studios, the production arm behind shows including "Coronation Street," "Emmerdale" and "I'm a Celebrity…Get Me Out of Here!," will become a standalone publicly traded company. The unit generated £2.1 billion in revenue in its last fiscal year, with adjusted EBITA flat amid a tough economic environment for production businesses.

Sky has agreed to a £2.1 billion content supply agreement with ITV Studios covering the five years from 2028 through 2032, guaranteeing minimum spend on shows including "Love Island" and the broadcaster's daytime slate. Programming acquired under the agreement will not count toward ITV's independent production quotas, preserving opportunities for outside producers.

ITV Studios, led by Julian Bellamy, owns production companies including Lifted Entertainment, Big Talk and Mammoth Screen, along with international operations across Europe, the US and Australia. The company will hold a capital markets day after the deal closes to outline its strategy to investors.

Regulatory Path and Synergies

The transaction is subject to customary regulatory approvals, with closing expected in the second half of 2027. A deal of this scale would have raised significant competition concerns in prior years, but the upheaval caused by global tech platforms in the advertising market has shifted the regulatory calculus. Sky and ITV's combined TV and streaming viewing share of 18.3 percent in May trailed YouTube's 18.6 percent, according to Barb.

Sky expects to generate about £200 million in annual cost synergies on a run-rate basis by the end of the third year after closing, primarily through efficiencies in marketing, technology platforms and non-UK content.

ITV will retain its public service broadcasting commitments, including regional and national news, under the terms of its Channel 3 licenses through 2034. ITV News and Sky News will remain distinct editorial voices, according to the companies.

"ITV has successfully evolved in a rapidly changing media landscape — launching and scaling ITVX and developing ITV Studios into a major force in the global content market," Carolyn McCall, chief executive of ITV, said. "This transaction builds on that momentum to deliver clear, tangible value for shareholders."

Andrew Cosslett, chair of ITV, said the deal secures ITV's role as a public service broadcaster "at a time of rapid change in the industry" and creates "a UK champion with the scale and resources to better compete with global streaming platforms."

This article is for informational purposes only and does not constitute investment advice.