Sky’s planned £1.6 billion ($2.1 billion) takeover of ITV is an unprecedented coming together in British media, establishing the UK’s biggest commercial broadcaster.
The two companies aim to complete their union next year, creating what they described as a British “streaming champion,” even if their respective businesses are tied up in legacy linear television networks.
The deal logic is not complicated: To compete with the likes of YouTube, TikTok and Meta, Sky and ITV are combining to become “bigger beasts in the jungle,” as one former ITV executive put it. In short, it’s adapt or die.
ITV Studios will not be part of the Sky agreement and will remain a listed company. It will benefit from the transaction, however, after Sky agreed to sell The Great British Bake Off producer, Love Productions, to ITV Studios as a £200M side-deal to the acquisition.
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Sky and ITV’s respective CEOs held press calls on Monday morning to flesh out the $2.1 billion deal, which they described as a “historic” moment for the UK entertainment industry. Scroll on for five things you need to know about the merger.
1. This Is All Going To Take Time
Sky and ITV’s courtship has already taken nine months to reach the point of announcing a deal. The companies anticipate that securing regulatory approval will take another year to 18 months, which means it could be 2028 before they officially tie the knot.
Specifically, they expect an involved investigation from UK media regulator Ofcom and antitrust watchdog, the Competition and Markets Authority. Ofcom and the CMA will be nervous about Sky-ITV being too dominant in the TV ad market, with ITV alone having a 32% share of commercial viewing.
Sky and ITV will ask the regulators to take a step back and examine the video market as a whole, not just broadcasting. Sky estimates that it would represent just 6.5% of the total UK ad market, which Strong said was “quite a minority” and maintains “good choice” for advertisers.
Official conversations have not yet started with the government and regulators, but Sky and ITV have been quietly making their case for months in press briefings. The CMA has got form in blocking major UK media transactions, famously preventing the BBC, ITV, and Channel 4 from launching a joint-venture streaming service in 2009. ITV and Sky will be hoping history does not repeat itself.
As they play the waiting game, ITV cannot take its eye off the ball. Some £200M of the £1.6 billion sale is contingent on it hitting ad revenue targets next year.
2. Job Cuts Are Coming
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Sky and ITV expect to make £200M in savings once the transaction is complete. Sky CEO Dana Strong said there would be “headcount reductions” across “corporate and commercial” functions, though she was no more detailed than this.
The majority of the savings, Strong said, will be made through marketing and technology, including moving ITVX over to the streaming infrastructure used by NBCUniversal to power Peacock.
Philippa Childs, head of creative industry union Bectu, said Sky and ITV are already engaging with unions over the merger, which she said will have “big implications for the future of the ITV workforce.” Figuring out the exact nature of these implications will take time, according to ITV CEO Carolyn McCall, who said Sky does not expect to be delivering efficiency savings until 2029.
Cutting Sky or ITV News is off the table — for now. ITV’s deal with ITN to produce ITV News runs until 2030 and does not contain a break clause. Comcast is also committed to Sky News until at least 2030, though Strong said its commitment would continue “well past” this deadline.
3. The Inevitable Executive Rejig
Sky
Strong committed to protecting content budgets, but stressed that it was too early to say who would be holding the purse strings. The industry expects that Sky Studios chief Cécile Frot-Coutaz will become the content chief across both companies, which could mean that Kevin Lygo, ITV’s top tastemaker, makes way after a decade-long spell in his role.
ITV boss McCall, meanwhile, declined to speculate on her own future. Asked if she would run ITV Studios post-transaction, she said “it’s not about me today” and pointed in the direction of Julian Bellamy, who has overseen Studios for 10 years.
McCall added that she won’t be short of work. “It’s still very important we own these businesses until the day we complete, and so there’s a huge amount to do there on performance,” she explained. “There’s also preparation for separation. There’s also the whole regulatory review.”
4. The Premier League On ITV?
Sky’s CEO Dana Strong played soccer in her youth and is a diehard sports fan, so it’s little wonder that she made the case for Sky showcasing its bountiful sports rights on ITV. “We want to put more sport into free,” she said.
This raises the tantalizing prospect of ITV becoming home to the odd Premier League game or Formula One race, though Strong was not specific in outlining her vision. It’s also important to note that, due to regulations around listed sports events in the UK, Sky is not allowed to move ITV’s FIFA World Cup coverage behind a paywall.
Whatever happens, hit shows like Love Island and Coronation Street will remain free-to-air on ITV under the deal. “We have no plan or intention of putting those shows behind a paywall,” Strong said. “[It’s] good for advertising dollars, good for viewers, good for the ITVX platform. So we wouldn’t see that changing.”
5. ITV Studios Goes It Alone
Love Productions/Channel 4
If the sale is approved, ITV would be separated from its production arm, ITV Studios, for the first time. Sky has struck a £2.1 billion output deal with ITV Studios until 2032, which will give ITV Studios certainty over the ongoing production of ITV hit series — but what happens beyond that? And will ITV Studios remain an independent listed company?
These questions will linger over the unit, which has been the source of M&A speculation for years, with the likes of Banijay known to be a potential suitor. Free from the regulatory strings of its public service parent company, ITV Studios’ pull will only increase.
For their part, ITV bosses talked up ITV Studios’ ability to go it alone. “Let’s not forget we are one of the biggest global studio groups in the world,” said boss Julian Bellamy. “We have over 60 companies in 30 different markets and 7,000 hours [of] content every year. We’re the second-biggest format distributor in the world. We have these big competitive advantages: A formidable talent base, and an IP library that is one of the best and biggest in the business, and predominantly they are bankers – extremely valuable assets in the market.”
