Sky and ITV are coming close to a deal that would see the Comcast-owned company acquire the leading commercial television broadcaster in the United Kingdom. ITV has confirmed that it is still in active discussions with Sky. ITV News carried an exclusive saying that sources suggest an agreement could be reached within weeks.
The proposed acquisition was first announced in November. It would see ITV split in two, with the television channels and its ITVX streaming service sold to Sky for a reported £1.6 billion, while ITV shareholders retain the studios business, which produces programmes for ITV and other broadcasters and online video platforms.
The coverage on the ITV web site cited sources familiar with the negotiations, on both sides of the transaction. It suggested that there is growing confidence that key elements of the deal are falling into place, although no agreement has yet been finalised and discussions remain ongoing. It said the contracts are currently being scrutinised by Comcast lawyers in the United States.
In a trading update, ITV said the company remains in “active discussions” with Sky regarding a possible sale of the media and entertainment business. It said it would update the market in due course.
First quarter revenue for the media and entertainment side of the business was down £12 million to £477 million compared to the same period the previous year.
So-called digital revenue, from online services, was up 12% to £149 million for the quarter, with online video hours up 13% to 692 million.
ITV had a 31.8% share of commercial television viewing, down 2% on the previous year. That is expected to improve in the second quarter through advertising around the football World Cup.
Comcast, with annual revenues of £90 billion, is a giant compared to ITV, which has revenues of around £2 billion. It acquired Sky in 2018 for £31 billion but is perceived to have overpaid and has written off around a quarter of the purchase price.
As part of that deal, Comcast committed to guarantee the budget for Sky News, indexed to inflation, for 10 years.
Sky News loses about £100 million a year but is influential and contributes to the brand value of the Sky proposition.
ITV has a 40% stake in ITN, the news organisation that provides news for ITV, Channel 4, and Channel 5.
Sky is reported to be prepared to commit to honouring the terms of the ITV public service broadcasting licence, which runs until the end of 2034. This requires it to provide national and regional news, current affairs, and a specific quota of programmes produced in the United Kingdom.
Any deal would need to be approved by the Competition and Markets Authority and Ofcom, with the final decision resting with the Secretary of State.