Sky in £1.6bn talks to acquire ITV’s TV and streaming unit

UK broadcaster ITV has confirmed that it is in preliminary discussions to sell its television and streaming businesses to rival broadcaster Sky in a deal estimated at about £1.6 billion ($2.1 billion).

The arrangement, if concluded, would see Sky – which is owned by US media conglomerate Comcast – assume control of ITV’s broadcast channels and digital streaming platforms. However, ITV cautioned that negotiations are still at an early stage and may not lead to an agreement.

“At this time, there can be no certainty regarding the terms of any potential sale or whether a transaction will proceed,” the company said in a statement cited by AFP.

The possible deal excludes ITV Studios, the company’s content production arm, which has grown into a major international supplier of film and television programming and remains ITV’s most profitable division.

The news boosted investor sentiment, sending ITV shares up around 15 per cent on Friday. The spike comes despite forecasts indicating that the broadcaster’s advertising revenue will drop by about nine per cent in the final quarter of the year, as firms delay ad spending ahead of the UK government’s November budget announcement.

Analysts say Sky’s interest in ITV’s broadcast and streaming unit was unexpected.

“Most observers assumed the production business would attract buyers first,” said Dan Coatsworth, head of markets at AJ Bell, according to AFP. “The fact that Sky has come forward for the media and entertainment arm is surprising – and a relief for ITV’s management.”

Meanwhile, ITV said it remains on track to achieve £35 million in cost savings this quarter as part of ongoing efforts to address rising operational costs and a weakening advertising market.

More details are expected as negotiations continue.