ITV doesn’t expect it will be easy to convince regulators to approve the biggest merger in the history of U.K. broadcasting.
ITV CEO Carolyn McCall, speaking to the media on a conference call following the news that Comcast-owned Sky plans to acquire ITV’s networks and streaming business for $2.13 billion (£1.6 billion), admitted antitrust scrutiny will be rigorous.
“We expect a very through and comprehensive review [of the deal]. Which we expect will go to phase 2,” said McCall, noting that U.K. regulatory approval could take “12 to 18 months.”
A Sky-ITV deal, which brings together Britain’s leading free-to-air broadcaster with the country’s top pay-TV operator, was never going to get a quick rubber stamp. A stealth attempt by Sky’s predecessor BSkyB — then controlled by Rupert Murdoch’s News Corp. — to acquire ITV back in 2006 triggered a regulatory backlash, with antitrust watchdogs arguing the merger threatened media plurality. A year later, ITV, the BBC and Channel 4 proposed Project Kangaroo, a link-up which would have seen them launch a joint streaming venture, years before Netflix launched in the U.K.. Regulators also shot it down, arguing the deal would give the partners too much control over British TV content and stifle competition.
This time, ITV hopes, things will be different.
The company is betting regulators will buy its argument that “the market has changed fundamentally,” due to the rise of streaming and online platforms. ITV and Sky are no longer just in competition with each other, and Paramount Global-controlled Channel 5, for TV advertising dollars, but in a battle with global streaming giants and technology platforms.
“The [U.K.] ad market is not three broadcasters competing…but just an enormous number [of media companies] competing for video advertising. It’s Meta, Disney, Apple, Amazon, it’s everyone,” said McCall. She noted that Sky and ITV combined would have “about 20 percent” of the overall market for video advertising in the U.K., less than YouTube alone.
ITV is trying to strengthen its case with U.K. regulators by doubling down on its commitments as a Public Service Broadcaster (PSB), noting that, post-merger, the network will continue to provide its top programs — from soaps like Coronation Street and Emmerdale to reality TV hit Love Island — free of charge to U.K. viewers while meeting other PSB requirements, including sourcing a minimum of 25 percent of its programing from independent producers, with 35 percent coming from outside London. Fully 85 percent of primetime programming, shows that air between 6 and 10:30 pm, must be originals, ensuring, said McCall, that “U.K. production at scale” will continue.
A bigger potential issue could be U.S.ownership. While McCall argued that Sky is “perceived as British,” parent Comcast is very much American. Following Paramount Global’s 2014 acquisition of Channel 5, the Sky deal would put the bulk of Britain’s commercial TV market, Channel 4 and UKTV excluded, in U.S. hands.
McCall, however, insisted that the Sky merger was “a deal about Britain, about investing in British content.”
Under the terms of the deal, ITV Studios will sign a long-term content supply agreement with ITV and Sky covering many of its landmark British shows, including Coronation Street, Love Island and I’m a Celebrity…Get Me Out of Here!, with a guaranteed minimum spend of $2.81 billion (£2.1 billion) between 2028 and 2032.
ITV also downplayed the prospect of major job losses post merger, saying redundancies would be primarily concentrated around “duplicated” operations at the two companies. McCall said she sees Sky and ITV as broadly complementary, and played up synergies as a major source of growth.
The broadcaster, however, will not reinvest the bulk of the proceeds from the sale. McCall said ITV planned to pay out £950 million ($1.27 billion) to ITV shareholders. She argued that ITV has a “strong balance sheet” and was not dependent on a new “war chest ” to spur growth.
ITV Studios, the production arm behind Love Island, Netflix hit Fool Me Once, and Britain’s Got Talent among many franchises, is not part of the Sky deal and will be spun off as a standalone listed company. Many view ITV Studios as the next takeover target. “It’s consolidation everywhere,” admitted McCall, but called a sale of ITV Studios as “unlikely” saying the company had the size and financial might to remain a “large, independent studio.”
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