ITV has confirmed that it is in preliminary discussions regarding a possible sale of its media and entertainment business to Sky for an enterprise value of £1.6bn. That would include the broadcast channels and the ITVX online service, but not the ITV Studios production business. Sky is owned by the American communications company Comcast, which also owns NBC, Universal, and the Peacock online service, among other brands, with combined revenues of over $123 billion in 2024. The discussions are at an early stage and would require regulatory approval.

It comes after ITV reported that it expected advertising revenue to be down 6% over the year. The share price rose by about 18% on the reports but was still below the high for the year, at less than a third of the value ten years ago.

In 2006, what was then BSkyB acquired a 17.9% stake in ITV plc for £940 million. The Competition Commission ruled that this could operate against the public interest and Sky was obliged to reduce its holding to less than 7.5%, which it did at a considerable loss. It disposed of part of its stake to Liberty Global, which recently reduced its holding in ITV.

Between them, Sky and ITV, the largest commercial broadcaster in Britain, control sales of about two thirds of television advertising time in the United Kingdom, with most of the rest sold by Channel 4. Any combination of the Sky and ITV advertising sales houses is likely to involve investigation by the Competition and Markets Authority, with input from the communications regulator Ofcom.

A key consideration will be whether the relevant market is wider than television, given the growth in online advertising, which is now much larger. Television advertising in the United Kingdom is worth about £5.2 billion a year. Online display advertising is worth about £17.5 billion.

Traditional broadcasters face greater competition from online, including online video subscription services but also from YouTube, which has overtaken ITV in terms of share of total video viewing in the home on television and other screens.

Sky would be expected to assume the obligations that come with the ITV public service broadcasting licence, which ITV renewed for another 10 years in 2024. They include the provision of national and local news, original programming and working with independent producers.

There are issues of plurality, given that Sky and ITV, through its part ownership of Independent Television News, both have newsgathering operations that could have synergies.

Some analysts have suggested that the move by Sky, now backed by the deep pockets of Comcast, could be seen as the best long-term survival strategy for ITV in a changing media climate.

It still leaves the production arm, ITV Studios, which could attract further bids from potential purchasers, some of which have previously expressed an interest in acquiring that business.

The board will be obliged to consider the bid on behalf of its shareholders, weighing the financial, strategic, and operational implications. In this case it is not a proposed takeover but a corporate transaction for a major business unit. Nevertheless, it would require shareholder approval and importantly regulatory clearance.

www.itv.com
www.sky.com
www.comcast.com

Netflix is reported to be exploring a bid for the Warner Bros Discovery studio and online video business. It has hired an investment bank to evaluate a possible offer and has been given access to the data room with the financial details of the company.

Netflix has hired Moelis & Co, the investment bank that advised Skydance Media on its successful bid for Paramount Global, to consider a prospective offer, according to Reuters reports. The companies involved have declined to comment.

Warner Bros Discovery is evaluating its own options, after receiving multiple offers from Paramount Skydance to acquire the entire company. The WBD board is currently considering whether to proceed with a planned split to separate its studio and television businesses or to pursue a sale of all or parts of the company.

Netflix has not looked to acquire potential competitors previously but could be considering the threat of the alternatives. The combination of Paramount Skydance and Warner Bros could provide real competition. On the other hand, if Netflix were to make a successful bid, it could strengthen its hand with a strong catalogue including the Superman, Batman, Harry Potter, and Barbie franchises, among many more.

Ted Sarandos, the joint chief executive of Netflix, told analysis in its recent earnings call that the company as “no interest in owning legacy media networks”, saying it can be choosy and is “predominantly focused on growing organically”.

Greg Peters, the other joint chief executive, said “We’ve also seen a lot of industry consolidation over the years” and “we have also seen a wide range of outcomes from such mergers”.

“Watching some of our competitors potentially to grow bigger via M&A does not change in and of itself, at least our view of the competitive landscape”. However, it said “it’s our responsibility to look at every significant opportunity” and “we’ll do whatever we thing is best to grow the business”.

www.netflix.com
www.wbd.com

An independent group of media experts, academics and producers is calling on the Culture Secretary, Lisa Nandy, to use the review of the BBC Charter to separate the corporation entirely from the influence of government, calling the current arrangements “no longer fit for purpose”. It wants a new permanent charter to establish the BBC in pertpetuity.

The British Broadcasting Challenge, set up four years ago to support public service broadcasting in the United Kingdom, proposes that the forthcoming review of the BBC Charter should be used to give the BBC a permanent status and to remove the ability of the government to appoint BBC Board members.

The recommendations are contained in a report, Renewing the BBC: A New Charter for Britain and for the World published online by the group. The recommendations include:

• A new and permanent Charter establishing the BBC’s right to exist in perpetuity
• An independent body with responsibility for appointing the governing board
• An independent assessment of BBC funding
• A new BBC purpose of countering disinformation
• Operating agreements between BBC and government to be updated every 10 years.

The campaign suggests that the BBC is Britain’s most effective defence against the dangers of global media power being concentrated in the hands of a few private individuals, and that Charter renewal offers “a perfect opportunity for this government to future-proof a uniquely British institution, and to insulate our democracy as well as our culture”.

Pat Younge, the chair of the self-appointed group, who was previously chief creative officer of BBC Television Production, said: “With the untrammeled consolidation of traditional broadcasting and tech platforms, privately controlled by a small number of seemingly like-minded individuals, the universal ownership and standing of the BBC as an independent institution is a vitally important bulwark to protect our democracy. The status quo arrangements are no longer fit for purpose.”

www.britishbroadcastingchallenge.com