ITV has agreed to sell its Media & Entertainment (M&E) business to Sky in a deal worth up to £1.6bn, creating the UK's second-largest broadcaster after the BBC while leaving ITV Studios as a standalone London-listed content business.

By bringing together two of Britain's biggest broadcasting operations, the deal promises greater scale and opportunities to improve efficiency in order to better compete with deep pocketed global players.

The transaction, first announced in November, includes £1.2bn in cash, Love Productions, valued at £200m, and up to £200m in contingent consideration linked to advertising performance in 2027.

After transaction and separation costs, ITV expects net proceeds of around £1.05bn, with approximately £950m, equivalent to 25 pence a share, to be returned to shareholders following completion.

Sky is currently owned by US media giant Comcast, but combined with ITV M&E will be part of NBCUniversal once Comcast's recently announced separation into two separate businesses is complete.

ITV said the proceeds would first be used to reduce ITV Studios' debt before the capital return. The standalone studios business is expected to deliver above-market organic revenue growth, adjusted earnings margins of 13% to 15% and strong cash generation, supported by its global production and content distribution operations.

ITV shares rose around 1% following this morning's announcement. The broadcaster said trading expectations for the current year remain unchanged, with total advertising revenue expected to rise around 8% in the second quarter.

Dana Strong, Sky Group CEO, 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. 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.”

Carolyn McCall, CEO of ITV added: “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. I am also confident that Sky will be a strong and responsible custodian of ITV M&E."

The deal is expected to complete in the second half of 2027, subject to regulatory approvals.
“This looks like a win-win situation for both ITV and Sky and is the biggest shake-up of the UK’s media landscape in decades,” commented Dan Coatsworth, head of markets at AJ Bell. “ITV’s shares might trade on a higher multiple of earnings as historically the linear TV operations acted as a drag on its valuation.”

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