ITV has agreed to sell its Media and Entertainment business to Comcast-owned Sky for up to £1.6bn, in a deal that will hand around £950m back to shareholders and leave ITV Studios as a standalone, London-listed global content company.
Rumours of a break-up have been swirling for years as investors have pressured ITV to unlock the value in its content business, which many saw as being held back by a stuttering broadcast arm.
And the deal has finally been struck for a base consideration of £1.4bn, comprising £1.2bn in cash plus Sky’s Love Productions business, the maker of the Great British Bake Off, valued at £200m.
A further £200m in contingent cash could follow in the second half of 2028 if ITV’s total advertising revenue exceeds £1.7bn in 2027.
“At a headline value of up to £1.6bn, the sale of ITV’s M&E division will deliver a significant cash return to shareholders,” said Andrew Cosslett, Chairman, ITV.
“Crucially, the transaction also unlocks the value of ITV Studios which post completion will be a distinctive pure-play global content business, with a strong track record of success and excellent prospects, further underpinned by a long-term partnership with ITV M&E and Sky.”
Separating a business that has been integrated for decades is expected to incur separation costs of around £185m gross expected over the next three to four years, leaving net cash proceeds of roughly £1.05bn.
Proceeds will first reduce ITV Studios’ leverage to around 1.5x net debt to EBITDA, after which the board plans to return around £950m to shareholders. This equates to 25p per share and roughly 90% of net proceeds.
Central to the deal is a long-term content supply agreement between ITV Studios, ITV M&E and Sky, covering flagship programmes including Coronation Street, Emmerdale, Love Island and I’m a Celebrity. The partnership carries a minimum spend commitment of £2.1bn over 2028-2032, giving the studio business solid revenue visibility as it goes it alone.
ITV shares were little changed, trading up 1%, at the time of writing.