ITV does not expect it will be easy to convince regulators to approve the biggest merger in UK broadcasting history.
Speaking to media on a conference call following news that Comcast-owned Sky was planning to take over ITV’s networks and streaming business for $2.13bn (£1.6bn), ITV chief executive Carolyn McCall admitted antitrust scrutiny would be tough.
“We expect a very thorough and comprehensive review [of the deal]. “We expect it to move to phase two,” McCall said, noting that regulatory approval in the UK could take “12 to 18 months.”
The Sky-ITV deal, which brings together Britain’s leading free-to-air broadcaster and the country’s largest pay-TV operator, was not going to get a quick rubber stamp. The covert attempt by Sky’s predecessor BSkyB – which was controlled by News Corp – led to Rupert Murdoch’s acquisition of ITV in 2006 led to a regulatory backlash, with antitrust watchdogs arguing that the merger threatened media pluralism. A year later, ITV, BBC and Channel 4 proposed Project Kangaroo, a tie-up that would have launched a joint streaming venture, years before Netflix launched in the UK. Regulators also rejected it, arguing that the deal would give the partners too much control over British television content and stifle competition.
This time, ITV is hoping things will be different.
The company is betting that regulators will believe its argument that “the market has fundamentally changed,” due to the rise of online streaming platforms. ITV and Sky are no longer just competing 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.] The ad market isn’t just three broadcasters competing…it’s just a huge number [of media companies] Competition for video ads. “It’s Meta, it’s Disney, it’s Apple, it’s Amazon, it’s everyone,” McCall said. She noted that Sky and ITV combined would account for “about 20 percent” of the total UK video advertising market, less than YouTube alone.
ITV is trying to strengthen its case with UK regulators by doubling down on its commitments as a public service broadcaster (PSB), noting that after the merger, the network will continue to offer its best programming – from series such as Coronation Street and Emmerdale To reality TV Love Island – Free to viewers in the UK while meeting other PSB requirements, including sourcing at least 25 percent of its programming from independent producers, with 35 percent coming from outside London. 85% of prime-time programs show that broadcast between 6pm and 10.30pm must be original, ensuring, as McCall said, that “UK production at scale” continues.
A larger potential issue may be US ownership. While McCall argued that Sky is “seen as British,” parent Comcast is largely American. Following Paramount Global’s acquisition of Channel 5 in 2014, the Sky deal will put the bulk of Britain’s commercial TV market, excluding Channel 4 and UKTV, in US hands.
However, McCall 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 popular British shows, including Coronation Street, Love Island and I’m a celebrity…get me out of here!With a guaranteed minimum spending of $2.81 billion (£2.1 billion) between 2028 and 2032.
ITV also played down the possibility of significant job losses following the merger, saying the layoffs would be primarily centered around “duplicated” operations at the two companies. McCall said she saw Sky and ITV as broadly complementary, and stressed synergies as a key source of growth.
However, the broadcaster will not reinvest the bulk of the proceeds from the sale. McCall said ITV plans to pay £950 million ($1.27 billion) to ITV shareholders. She said ITV had a “strong balance sheet” and was not relying on a new “war chest” to stimulate growth.
ITV Studios, the production arm behind it Love Islandhit Netflix Fool me onceand Britain’s got talent Among several concessions, it is not part of the Sky deal and will be spun off as an independent listed company. ITV Studios is seen by many as the next takeover target. “It’s a merger all over the place,” McCall admitted, but described a sale of ITV Studios as “unlikely”, saying the company had the scale and financial strength needed to remain a “large, independent studio.”
