The two British media businesses are set to come under one roof, as ITV has agreed to sell its broadcasting and streaming business to Sky for up to £1.6bn (€1.87bn), in a deal that would create a major new competitor to global streaming platforms.
Sky, the UK-based TV, internet and mobile phone provider owned by Comcast, has agreed to buy ITV’s media and entertainment arm for up to £1.6bn (€1.87bn) after months of talks in a deal aimed at creating a major competitor to global streaming giants.
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The deal, which would significantly expand Sky's audience, comprises £1.2bn (€1.4bn) in cash, the transfer of Love Productions and up to £200mn (€233.8mn) in performance-related payments, according to the company's statement.
The deal includes ITV's terrestrial TV channels and streaming service. ITV’s production arm, ITV Studios, known for shows such as the “I’m a Celebrity” series, will remain an independent company.
The transaction will “create a UK champion with the scale and resources to better compete with global streaming platforms,” ITV chairman Andrew Cosslett said in a statement.
According to the statement, the combined company would bring together free-to-air television, advertising-funded streaming and subscription TV, alongside Sky’s broadband, mobile and business services, giving it a broader range of revenue sources.
ITV reaches around 40 million people a week and has more than 16.5 million monthly digital users. “Combined with Sky, the business would account for around 20% of all in-home viewing in the UK, second to the BBC and ahead of YouTube, and create a commercial streaming champion for the UK,” the statement said.
The company expects the combination to generate around £200mn in annual cost savings by the end of the third year after completion, mainly through efficiencies in marketing, technology platforms and non-UK content.
Sky has also agreed to enter into a £2.1bn content supply agreement over 5 years with ITV Studios upon completion of the deal.
The combined Sky-ITV entity will become part of NBCUniversal following the completion of its split from Comcast, ITV said. ITV News and Sky News will remain editorially separate.
ITV shares, which trade on the London Stock Exchange, gained more than 1% by early afternoon on Monday.
