Introduction to the Proposed Takeover
Sky’s planned £1.6bn takeover of a large part of ITV would be the biggest consolidation in British broadcasting in more than 20 years. This move reflects fundamental changes in viewing habits and commercial realities. For Sky, combining its existing content with ITV’s would make it the UK’s biggest commercial broadcaster, strengthening its position in the battle with US streaming giants.
The Benefits for Sky
The deal would see Sky take over ITV’s media and entertainment business, including its free-to-air channels and public service broadcasting license, which runs until 2034, as well as its streaming platform ITVX, which has 40 million registered users. The ITV brand is likely to be retained, and the two companies will be run separately, but Sky would look to capitalize on its commercial and technological strengths.
The Impact on ITV
For ITV shareholders, who have seen the value of their investment fall as advertising revenues have moved online along with viewers, this could be an opportunity to exit. ITV’s PSB license includes a requirement that ITV’s app be "available, prominent and easily accessible" on online platforms, a crucial showcase as viewers access content directly. Combined with Sky’s existing 13 million largely paid content subscribers in the UK, this would give the broadcaster more clout as it competes for attention, subscription revenue, and advertising spend.
The Changing Landscape of Broadcasting
The acquisition would be a reaffirmation of Comcast’s commitment to Sky. After paying £31bn for Sky in a bidding war with Disney seven years ago, the company wrote down that investment by more than £6bn in 2022 and announced the sale of Sky Deutschland earlier this year. As the company looks to strike exclusive deals with content providers, including HBO, which has given it rights to hits such as Succession, this season’s £5bn renewal of Premier League rights has underlined the centrality of sport to Sky’s offering.
Competition in the Market
Size matters because even companies as well-known in Britain as Sky and ITV compete with giants, both for viewers and advertisers. Netflix has 301 million subscribers worldwide and annual revenue of nearly $40 billion. Amazon, the world’s largest retailer, is now an entertainment content provider. In the US, Warner Bros. Discovery is considering a sale after reportedly rejecting offers worth more than $60 billion. Google and Meta now consume up to 60% of all UK advertising spend, a development over the last decade that has hit ITV particularly hard.
Regulatory Scrutiny
Any proposed deal will be subject to regulatory scrutiny by Ofcom and the Competition and Markets Authority. However, both parties will argue that these commercial realities mean consolidation would strengthen, not weaken, the broadcast sector. ITV is still generating critical and commercial hits and live moments, and the acquisition could provide a welcome boost to its commercial model, which has struggled to satisfy investors given the general trajectory of the UK economy.
