ITV to Sell Broadcasting Unit to Sky for Up to £1.6 Billion

ITV Plc has agreed to sell its media and entertainment arm to Comcast Corp.-owned Sky Group Ltd. in a deal worth as much as £1.6 billion ($2.1 billion) including debt, reshaping the UK television industry.

The agreement to sell ITV’s free-to-air TV channel operations and the ITVX streaming platform includes £1.2 billion in cash, the transfer of the producer of hit TV show The Great British Bake Off and as much as £200 million in additional contingent payments tied to advertising performance, the companies said in a statement Monday.

The split will leave ITV Studios, the half of the business that produces and distributes content, as a London-listed standalone. ITV expects the deal to return approximately £950 million to shareholders after reducing debt and covering separation costs, it said in the statement.

The deal will build up Sky’s entertainment business at a time when parent company Comcast is splitting off its media arm, including NBCUniversal and Sky, in a strategy reversal.

Read More: Comcast Plans to Spin Off NBCUniversal in Strategy Reversal

Comcast has written down the valuation of Sky by billions of dollars since acquiring it for $39 billion in 2018. The US company in June completed the sale of its German business Sky Deutschland for an upfront price of €68 million, less than half the value announced when the deal was agreed last year, showing how much the market for European broadcasters has deteriorated.

The deal will be a closely watched test case for consolidation in the legacy media sector, which has been reshaped by the rise of digital platforms. Like many traditional broadcasters, ITV has been cutting costs as advertising revenues come under pressure from audiences shifting to online streaming and alternative digital media. The companies aim to complete the transaction in the second half of 2027, subject to regulatory approvals.

ITV has long been seen as one of the top takeover candidates in European media. Buyout firm CVC Capital Partners Plc, Abu Dhabi-backed investment group RedBird IMI, the Berlusconi family’s broadcasting company MFE-MediaForEurope NV, French production house Banijay Group NV and Mediawan SA, the entertainment firm co-founded by billionaire Xavier Niel, are among suitors that have previously been reported as potentially showing interest in part or all of ITV.