The broadcasting landscape in the UK is set to undergo significant changes as Sky is expected to announce a £1.6 billion deal to acquire ITV's broadcasting arm. The acquisition, which is expected to be completed by the end of July, will also see Sky commit £2 billion to ITV Studios over the next five years.
ITV Studios, which generates over half of the group's £4.1 billion revenue, will remain listed on the London Stock Exchange and will continue to operate independently. The deal, however, will see ITV's production side, which includes contracts with rival broadcasters and global streamers, come under Sky's control. The production side has clients worth hundreds of millions of pounds a year.
The agreement is expected to secure the near-term future of ITV's biggest hits, including Coronation Street, Emmerdale, Love Island, and I'm a Celebrity. Coronation Street remains the country's most-watched soap, drawing around four million viewers per episode. However, audiences have declined over the years, and some industry experts worry about the programme's longer-term direction.
The deal will also see ITV Studios acquire Love Productions, the maker of The Great British Bake Off, from Sky. The deal is expected to be worth around £200 million. Dame Carolyn McCall, ITV's long-serving chief executive, is expected to stay on at the studios business until the transaction has closed.
The Competition and Markets Authority (CMA) and the communications watchdog Ofcom will scrutinize the deal closely, a process that could take several months. Sky and ITV are confident that they can persuade regulators that the deal will not harm competition, citing the shift towards digital giants like YouTube and Google dominating the advertising market.
Ofcom is also likely to consider concerns about the owner of Sky News taking on ITV's 40 per cent holding in ITN, the company behind ITV News, Channel 4 News, and 5 News. Comcast acquired Sky in 2018 for $39 billion and has been working to strengthen the company's position in the UK market.
Sky believes that buying ITV will give it a stronger hand in the market and allow it to share costs with ITV. The group plans to use ITV's free-to-air channels to promote its subscription products and build a top-three commercial streamer in the UK, a goal that pits it against US streaming platforms.
