ITV said on Monday it reached an agreement to sell its Media and Entertainment business (ITV M&E) to Sky, a wholly owned subsidiary of Philadelphia-based Comcast, for a total consideration of up to £1.6 billion.
“Following Comcast’s planned separation, Sky and ITV’s M&E business are expected to form part of NBCUniversal upon completion of both transactions,” said ITV.
“At completion of the Transaction, ITV will receive a base consideration of £1.4 billion, comprising £1.2 billion in cash (upon which no tax is payable and is subject to customary closing adjustments) and the contribution of Sky’s wholly owned Love Productions business, valued at £200 million on a cash-and debt-free basis.
“In addition, ITV may receive contingent cash consideration of up to £200 million, payable if ITV’s total advertising revenue (TAR) exceeds £1.7bn for FY 2027, subject to certain trading balance adjustments. The contingent consideration is subject to UK corporation tax.
“Crucially, the transaction also unlocks the value of ITV Studios that post completion will be a distinctive pure-play global content business with a listing in London.
“To unlock this value, ITV plc will be separating a business that has been integrated for decades, which is a complex exercise.
“As a result, ITV will incur transaction and separation costs of c.£185 million gross or c.£155 million net of tax, to be incurred over the next three to four years.
“Therefore, net cash proceeds are expected to be approximately £1.05 billion, excluding any contingent consideration. Proceeds will first be used to de-lever ITV Studios to c.1.5x net debt to EBITDA post completion.
“The Board then expects to return around £950 million to ITV shareholders following completion (c.90% of net cash proceeds, equivalent to 25p per share), excluding any contingent proceeds (the Capital Return). The mechanics of the Capital Return will be announced in due course.
“At completion of the Transaction, ITV Studios will enter into a long-term Content Supply Agreement (the CSA) with ITV M&E and Sky, covering key programmes and genres such as Coronation Street, Emmerdale, Love Island, I’m a Celebrity…Get Me Out of Here! and Daytime.
“This is a long-term strategic partnership which includes a minimum spend commitment of £2.1 billion over 2028-2032, providing revenue visibility for ITV Studios.
“The Transaction is subject to regulatory approvals and other customary conditions, with completion expected in H2 2027. The preparations for separation are progressing well and until completion, ITV will continue to operate both ITV M&E and ITV Studios in the ordinary course.
“After separation, ITV Studios will incur around £25 million of stranded costs per annum, which will be broadly offset by the contribution of Love Productions profit.”
ITV plc CEO Carolyn McCall said: “ITV has successfully evolved in a rapidly changing media landscape – launching, and scaling, ITVX and developing ITV Studios into a major force in the global content market. This transaction builds on that momentum to deliver clear, tangible value for shareholders.
“At the same time, through the commitments made by Sky, the combined ITV M&E / Sky business will continue to deliver everything about ITV that our viewers and advertisers love and value and our people are hugely proud of – making programmes that reflect and shape society, bringing people together for shared experiences and having the quality, diversity and plurality that are the hallmarks of our contribution to the UK’s creative industries.
“In addition, all of ITV’s PSB commitments, including nations, regional and national news, are safeguarded under the terms of the Channel 3 Licences until 2034, which Sky is acquiring as part of the Transaction.
“I am confident that Sky will be a strong and responsible custodian of ITV M&E, building on its heritage while investing in its future and safeguarding the qualities that make ITV so valued by viewers, advertisers and the UK’s creative industries.
“Looking ahead, ITV Studios will be well positioned to deliver long-term value to its shareholders through a combination of above-market profitable organic revenue growth and attractive returns to shareholders.
“This is driven by its world class talent, global scale and a unique IP library, and further supported by a long-term strategic partnership with ITV M&E and Sky, including a £2.1 billion minimum spend commitment.
“The value this transaction creates reflects a huge amount of hard work and the successful execution of our strategy and I would like to thank all our colleagues for their hard work, focus and commitment.”
Sky CEO Dana Strong said: “This is a defining moment for British media and an opportunity to build a stronger future for two of the UK’s most loved and trusted brands.
“We have huge respect for the transformation the ITV team has delivered, particularly its successful move into streaming through ITVX, which has brought fantastic British content to millions of viewers across the UK.
“Bringing Sky and ITV Media & Entertainment together combines the very best of free-to-air television, pay TV and streaming, ensuring viewers across the UK continue to enjoy outstanding British programming in a rapidly changing world.
“ITV will remain a public service broadcaster at the heart of British life, and we’re excited about the future we can build together.”