ITV shares soar as it holds talks to sell television business to Sky

ITV has told the market it is in preliminary talks to sell its broadcasting arm to the parent company of Sky in a £1.6bn deal, sending shares soaring. Comcast, the US telecom company that owns NBCUniversal, hopes to snap up ITV’s media and entertainment operations, which include its free-to-air TV channels in the UK and ITVX streaming platform. The deal does not involve the programme-making arm ITV Studios, one of the world’s biggest production companies. The division, which has made shows including Love Island, I’m a Celebrity and the hit drama Mr Bates vs the Post Office, has been the subject of separate takeover talks. ITV said there could “be no certainty” about the terms of a potential sale, or whether the sale would even take place, adding: “A further announcement will be made in due course, if appropriate.” Related: YouTube most popular first TV destination for children, Ofcom finds The comments sent ITV’s share price climbing by as much as 18% on Friday morning, before easing back to settle at 14% up, making it the top riser on the FTSE 250 index. However, a deal to combine the TV ad sales operations of ITV and Sky, giving Comcast potential control of more than 70% of the UK market, could prompt the competition regulator to intervene. Industry sources have said Sky may have to look at remedies, including relinquishing its third-party sales deals, which include representing ad sales for Channel 5 and Disney in the UK. That could require the Competition and Markets Authority (CMA) to reconsider how it measures the ad market to include digital advertising. “This is the biggest moment in ITV’s 70-year history, said Alex DeGroote, an independent media analyst. “It will completely change the UK broadcasting landscape. “And given ITV’s status as Britain’s biggest commercially funded, free-to-air public service broadcaster, a takeover by a US pay-TV operator makes the move not just a question for competition regulators, but also a politically sensitive one too.” He predicted a successful takeover would result in heavy job losses at ITV: “With duplication in many areas – from sales and management to news provision – if the deal goes through it will be a jobs bloodbath.” DeGroote suggested Comcast’s offer was not “particularly generous” at just three-quarters of the broadcasting arm’s annual revenues, suggesting it should match the full £2.1bn. Simon Davis, founder and chief executive of independent media agency Walk-In Media, said the price reflected “the lesser growth opportunity of ad-funded broadcasting and ITV’s vastly reduced dominance overall”. Juliane Althoff, a film and TV lawyer and partner at media and entertainment law firm Simkins LLP, said the sale “would be anything but straightforward, not least because ITV’s entertainment arm forms a huge part of its public service broadcasting identity”. She suggested the takeover would require close scrutiny by the CMA and communications regulator Ofcom “to ensure continued variety given Sky’s existing market presence in the pay-TV sector”. That would come on top of legal and commercial issues, including existing talent contracts, copyright arrangements and content licences. “These are all compounded by the involvement of third-party producers and cross-border financing structures, all of which would require careful negotiation.” The CMA said it would not comment outside a formal investigation announcement. Dan Coatsworth, head of markets at AJ Bell, expressed surprise that it was the broadcasting arm being pursued. “The fact the media and entertainment arm has attracted a suitor, rather than ITV Studios, is a surprise,” he said. “There was a lot of uncertainty over whether anyone would want to relieve ITV of this ball and chain, so to see interest from Sky is Christmas come early for management and shareholders.” In its latest quarterly results on Thursday, ITV announced plans for a one-off £35m cut to its budgets – including the delaying of some shows into 2026 and reducing marketing spending – amid the challenging macroeconomic environment and advertiser uncertainty in the run-up to the budget this month. The company said it expected advertising revenues, which still account for most of its income, to fall by 9% in the crucial fourth-quarter advertising period in the lead-up to Christmas.