Sky Buys ITV for £1.6 Billion to Fight Back Against Netflix and Amazon

TLDR

• Sky agrees to buy ITV’s Media & Entertainment division for £1.6 billion ($2.2 billion)
• Sky pays £1.2 billion in cash, plus up to £200 million tied to 2027 ad revenue targets
• ITV Studios stays as a standalone listed production company
• The combined business will reach over 20 million UK households
• Deal needs shareholder and regulatory approval, expected to complete in 2027

Sky has agreed to buy the broadcast and streaming arm of ITV for £1.6 billion in one of the biggest deals in British broadcasting history.

The deal covers ITV’s free-to-air TV channels and the ITVX streaming platform. ITV Studios, which makes shows like Love Island and Coronation Street, will stay as a separate listed company.

Sky will pay £1.2 billion in cash when the deal closes. A further £200 million could follow if ITV’s advertising revenue hits agreed targets in 2027.

As part of the agreement, ITV will buy Love Productions from Sky for £200 million. That brings the maker of The Great British Bake Off into ITV Studios.

Why the Deal Is Happening

Traditional broadcasters have been losing audiences to Netflix, Amazon, Disney and YouTube for years. The combined Sky-ITV business is designed to compete at a larger scale.

Sky CEO Dana Strong called it a “defining moment” in British broadcasting history. She said ITV would remain a public service broadcaster as part of the new company.

The merged group would reach more than 20 million UK households. It would also control more than 70% of the UK television advertising market, according to analysts.

That ad market share could draw regulatory attention. Sky may need to give up its third-party ad sales contracts, including those for Paramount-owned Channel 5, to address competition concerns.

What Happens to ITV

ITV will use the proceeds to pay down debt at ITV Studios. It plans to return around £950 million to shareholders, roughly 25 pence per share.

Morgan Stanley said the deal turns ITV into a focused content production business. The bank said the simpler structure should help management grow organically and return cash to investors.

Sky has committed to spend at least £2.1 billion on ITV Studios programming between 2028 and 2032. That gives the remaining business a long-term revenue base.

ITV’s shares were little changed after the announcement on Monday. The stock has fallen around 36% over the past five years, reflecting years of pressure in the ad market.

The deal still needs approval from shareholders, regulators and competition authorities. It is expected to close in 2027.

Comcast, which owns Sky, announced in June that it plans to spin out its media assets, including Sky and NBCUniversal, from its cable division.

British Culture Minister Lisa Nandy has shown interest in shaping media deals. She said last week she could intervene in the US Paramount-Warner merger, suggesting political oversight of this deal is possible.

The transaction will be closely watched by media companies in the UK as a test of whether large broadcast mergers can get through regulators in the current environment.

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