Sky Agrees to Buy UK’s ITV Media Business in $2.1 Billion Deal

The transaction includes ITV’s UK broadcast channels, ITVX streaming platform, and UTV but excludes ITV Studios and STV, which remain separate companies.

The Sky logo is seen illuminated on the outside of a building at the company's headquarters in West London, on Jan. 25, 2017. Toby Melville/Reuters

Sky has agreed to buy ITV’s Media & Entertainment business in a deal worth up to 1.6 billion pounds ($2.1 billion), bringing together two of the UK’s biggest television companies.

The deal, announced by Sky and parent company Comcast on July 6, would combine ITV’s free-to-air television channels, advertising-supported streaming platform ITVX, and Sky’s subscription television and broadband businesses into one media company.

“This is a defining moment for British media and an opportunity to build a stronger future for two of the UK’s most loved and trusted brands,” said Sky Group’s chief executive Dana Strong.

ITV Studios, the company’s television production arm, is not part of the sale and will continue operating independently.

“ITV will remain a public service broadcaster at the heart of British life,” said Strong.

ITV is the UK’s largest commercial streamer and broadcaster. It reaches about 40 million viewers every week, according to Sky, and has more than 16.5 million monthly digital users.

Combined with Sky, the companies estimate they would account for around 20 percent of all in-home television viewing in the UK, second only to the BBC and ahead of YouTube.

The amount will be split into 1.2 billion pounds ($1.6 billion) in cash, the transfer of Love Productions, valued at about 200 million pounds ($266 million), and up to 200 million pounds ($266 million) in additional payments tied to performance targets.

Changes Under the Deal

Popular ITV programs such as “Coronation Street,” “Emmerdale,” “Love Island,” “I’m a Celebrity... Get Me Out of Here!,” “This Morning,” “Loose Women,” “Lorraine,” and “News at Ten” would remain available on free-to-air television, according to the companies.

Sky also said viewers would have access to more live sports on ITV than before, although it did not provide details.

ITV News and Sky News would continue operating as separate editorial organizations under existing UK media regulations.

ITV chief executive Carolyn McCall said the broadcaster had already adapted to major changes in the television industry by expanding ITVX and growing ITV Studios into a global production business.

Costs and Regulation

Sky expects the combined company to generate approximately 200 million pounds ($266 million) in annual cost savings by the end of the third year after the transaction closes.

Most of those savings are expected to come from technology systems, marketing operations, and non-UK content spending. The acquisition remains subject to customary regulatory approvals before it can be completed.

The transaction includes ITV’s UK broadcast channels, ITVX streaming platform, and UTV but excludes ITV Studios and STV, which remain separate companies.

Sky would also become an indirect 20 percent shareholder in ITN, the news organization that produces programs including “News at Ten” and “Good Morning Britain.”

The deal was announced days after Comcast announced plans to separate its telecommunications operations from much of its media and entertainment business through a tax-free corporate restructuring.

Under that proposal, NBCUniversal would continue to own Universal Pictures, Universal Television, NBC, Telemundo, Peacock, Bravo, Universal theme parks, and European broadcaster Sky.

Comcast said the restructuring is expected to be completed in about one year.