Sky is to buy ITV’s media business for up to $2.1 billion

It’s finally official. British pay-TV provider Sky, owned by Comcast, has agreed to acquire ITV’s media and entertainment business for a total consideration of up to £1.6 billion ($2.14 billion).

The deal, expected to close in the second half of 2027, will split ITV Studios into a standalone global content company and return around £950 million ($1.27 billion) to shareholders.

The consideration consists of £1.2 billion ($1.61 billion) in cash at completion, the contribution of Sky’s Love Productions – maker of “The Great British Bake Off” and “The Piano” – worth £200 million ($268 million), and up to £200 million ($268 million) in contingent payments payable in the second half of 2028, linked to advertising revenue in the 2027 financial year. Sky is wholly owned by Comcast, and both Sky as ITV’s M&E business is expected to become part of NBCUniversal once its planned separation from Comcast is complete.

Net cash proceeds from the sale are estimated at approximately £1.05 billion ($1.4 billion), after approximately £185 million ($247 million) of transaction and separation costs. ITV plans to first use the proceeds to reduce ITV Studios’ debt to around 1.5 times net debt to EBITDA, and then return around £950 million ($1.27 billion) to shareholders, equivalent to 25p per share, excluding any contingent consideration.

As part of the transaction, ITV Studios will sign a long-term content supply agreement with ITV M&E and Sky on shows including ‘Coronation Street’, ‘Emmerdale’, ‘Love Island’, ‘I’m a Celebrity…Get Me Out of Here!’ and day care, with a minimum guaranteed amount of £2.1 billion ($2.81 billion) between 2028 and 2032.

Andrew Cosslett, chairman of ITV plc, said: “For more than seventy years, ITV has played an important and cherished role in the nation’s public life. At a time of rapid change in the industry, it is right that we now secure ITV’s vital role as a public service broadcaster and this transaction achieves this as ITV’s Media and Entertainment division, together with Sky, creates a UK champion with the scale and resources to better compete with global streaming platforms.”

Carolyn McCall, CEO of ITV plc, added: “I am confident that Sky will be a strong and responsible custodian of ITV M&E, building on its heritage, while investing in the future and safeguarding the qualities that make ITV so valued by viewers, advertisers and the UK creative industry.”

McCall described the transaction as a continuation of ITV’s move into streaming through ITVX and its growth into a major global content producer. All of ITV’s public broadcasting obligations, including country, regional and national news, will remain protected under the Channel 3 licenses acquired by Sky, which run until 2034.

Dana Strong, CEO of Sky, said: “This is a defining moment for British media and an opportunity to build a stronger future for two of Britain’s most loved and trusted brands.”

Strong said the deal reflects respect for ITV’s commitment to streaming through ITVX and unites the different ways the British public watches television under one roof.

“Bringing together Sky and ITV Media & Entertainment combines the very best of free-to-air television, pay TV and streaming, ensuring viewers across the UK can continue to enjoy excellent British programming in a rapidly changing world. ITV will remain a public service broadcaster at the heart of British life, and we are excited about the future we can build together,” said Strong.

The transaction values ​​ITV M&E at an EV/EBITDA multiple of approximately 5.6 to 6.4 times 2025 earnings, in line with recent precedent deals, ITV said. Upon completion, ITV Studios is expected to operate with adjusted EBITA margins of 13 to 15% and an average profit-to-cash conversion of approximately 80%. The company plans to hold a Capital Markets Day before the deal closes to build out its standalone strategy. The transaction requires regulatory approval and is not subject to shareholder approval under the UK Listing Rules.