Sky nears ITV broadcast unit acquisition in UK media deal

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Sky nears ITV unit acquisition

Highlights

Sky is finalising a £1.6 billion acquisition of ITV's Media & Entertainment unit, including broadcast channels and ITVX, with lawyers currently completing terms.
The transaction includes a performance-related payout of about £200 million and values Love Productions, to be acquired by ITV Studios, at £80–£120 million.
An official announcement on the deal could come within two weeks, but final legal complications may delay the timeline further.

Deal structure and expected timeline

As first reported by Reuters, Sky has agreed on terms to acquire ITV's Media & Entertainment unit, according to two people familiar with the matter. The unit includes ITV's broadcast channels and streaming platform ITVX, while the deal also provides for ITV Studios to buy Love Productions, the maker of "The Great British Bake Off" and "The Piano".

The people say the £1.6 billion transaction moves in a positive direction over the past week and is now being finalised by lawyers. They add that the total value includes an earn-out, and that Love Productions could be valued at between £80 million and £120 million based on comparable deals.

Reuters reported last month that the transaction includes a performance-related payout of about £200 million tied to the ITV unit. The people say an announcement could come within the next two weeks, although one source cautions that the timing could still slip because of final legal complications.

Strategic implications for ITV and Sky

ITV, Sky and parent company Comcast do not comment on the reported terms, with ITV and Sky spokespersons declining to comment and Comcast not immediately responding to a request for comment.

If completed, the agreement brings to a close a process that begins last year and becomes public in November, when ITV says it is in talks to sell Media & Entertainment to Sky. The proposed separation has been complex because ITV's channels and ITVX need to be carved out from ITV Studios, which is set to operate as a standalone production company after the transaction completes.

In our earlier article on Prologis’ all-stock bid for SEGRO, we outlined how SEGRO’s board pushed back against an approach it said undervalued the business, highlighting the execution risks and the prospect of a drawn-out UK takeover timeline. We also noted that boards across UK-listed companies are increasingly resisting unsolicited bids as the long-standing valuation discount narrows, raising pressure on bidders to improve terms and on management teams to justify holding out.

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