Sky reaches deal to buy ITV broadcast unit, sources say

• The deal values Love Productions, which Sky will transfer to ITV Studios, at between £80 million and £120 million based on comparable transactions
• The transaction involves separating ITV's channels and streaming platform ITVX from its production business ITV Studios, which will become a standalone company
• Final legal complications could still delay the announcement timing, though the deal has moved in a positive direction in recent weeks

Summary

Transaction Overview:

Sky, the Comcast-owned British pay TV group, has reached an agreement to acquire ITV's broadcast and streaming unit (Media & Entertainment) for approximately £1.6 billion. The deal is currently being finalized by lawyers and could be announced within two weeks, though timing may shift due to legal complexities.

Deal Structure:

The transaction includes multiple components:

• ITV Studios will acquire Sky's Love Productions (valued at £80-120 million), the production company behind "The Great British Bake Off" and "The Piano"
• An earn-out provision worth approximately £200 million, dependent on the ITV unit's future performance
• Total transaction value factors in these exchanges

Key Companies and Assets:

• Sky (Comcast): Acquiring ITV's broadcast channels and ITVX streaming platform
• ITV: Divesting its Media & Entertainment division while retaining and expanding ITV Studios as a standalone production business
• Love Productions: Moving from Sky to ITV Studios

Background:

The deal concludes negotiations that began last year and went public when ITV announced talks to sell the unit. The transaction involves the complex separation of ITV's distribution channels and streaming platform from its content production operations.

Market Implications:

This restructuring represents significant consolidation in the UK media landscape, strengthening Sky's content distribution capabilities while allowing ITV to focus on its production business. The deal reshapes competitive dynamics between traditional broadcasters and streaming platforms in the British market.