Comcast's Sky has finalized a $2.1 billion deal to acquire ITV's Media and Entertainment Unit, the companies announced on Monday. The agreement includes $1.6 billion in cash and up to $267 million in performance-related earn-out, and covers ITV's linear channels and the ITVX streaming platform.
As part of the deal, Sky will also acquire Love Productions, the company behind The Great British Bake Off. Sky has committed to $2.8 billion in content spending with ITV Studios over the next five years. Approximately $267 million in annual cost savings are expected to be generated on a run-rate basis by the end of the third year after closing, with the bulk coming from efficiencies in marketing, technology platforms, and non-U.K. content.
According to The Hollywood Reporter, ITV CEO Carolyn McCall acknowledged on a conference call that the road to regulatory approval will not be smooth. "We expect a very through and comprehensive review [of the deal]. Which we expect will go to phase 2," she said, adding that U.K. regulatory approval could take "12 to 18 months."
The deal is the largest merger in the history of U.K. broadcasting. Sky and ITV are Britain's leading pay-TV operator and free-to-air broadcaster, respectively. Previous attempts at consolidation in the British broadcasting market have run into trouble. A 2006 attempt by BSkyB, then controlled by Rupert Murdoch's News Corp., to acquire ITV was blocked by antitrust watchdogs over concerns about media plurality. A year later, a proposed joint streaming venture between ITV, the BBC, and Channel 4 called Project Kangaroo was also rejected by regulators.
ITV is betting that the landscape has changed enough to clear those hurdles this time. McCall argued that Sky and ITV are no longer simply competing with each other and Channel 5 for TV advertising dollars, but are now up against global streaming and technology companies. "The [U.K.] ad market is not three broadcasters competing…but just an enormous number [of media companies] competing for video advertising. It's Meta, Disney, Apple, Amazon, it's everyone," she said. She noted that Sky and ITV combined would hold "about 20 percent" of the overall U.K. video advertising market, less than YouTube alone.
ITV has also sought to reinforce its public service broadcaster commitments to regulators. Post-merger, the network says it will continue to provide programs such as Coronation Street, Emmerdale, and Love Island free of charge to U.K. viewers. The company says 85 percent of primetime programming must be original content, and that 35 percent of programming must come from outside London. McCall said this will ensure that "U.K. production at scale" continues.
One potential complication is U.S. ownership. While McCall argued that Sky is "perceived as British," its parent company Comcast is American. Following Paramount Global's 2014 acquisition of Channel 5, the Sky deal would place the bulk of Britain's commercial TV market in U.S. hands, with Channel 4 and UKTV the main exceptions.
Sky Group CEO Dana Strong struck an optimistic tone in a statement, saying the deal represents "a defining moment for British media." "Bringing Sky and ITV Media & Entertainment together combines the very best of free-to-air television, pay TV and streaming, ensuring viewers across the U.K. continue to enjoy outstanding British programming in a rapidly changing world," Strong said. The companies also confirmed that Sky News and ITV News will remain editorially distinct under the new arrangement, and that all of ITV's public service broadcasting commitments, including regional and national news, are safeguarded under the Channel 3 Licences until 2034. ITV reaches around 40 million people each week and serves over 16.5 million monthly digital users.
