- ITV sells its media and entertainment divisions to Sky
- The £1.6 billion deal is a massive shake-up for British television
- Analysts say viewers could expect Sky and ITV’s offerings to merge in the future
The UK television landscape has just changed in a big way, with ITV announcing that it has agreed to sell its media and entertainment business to Sky in a massive £1.6 billion deal.
The deal makes it one of the biggest deals in British media history. It will see Sky take ownership of the ITVX platform and ITV’s free-to-air channels, but does not include ITV Studios’ production arm (which makes the likes of I’m a celebrity and Mr Bates v Post Office).
So what does it all mean for the average Downton Abbey fan or Sky subscriber? Will ITV’s channels remain free-to-air? And what does this mean for current and future shows on both platforms?
Here are some of the big questions answered by media and TV experts…
Will ITV continue to be free?
Yes, at least for the foreseeable future. ITV has public service obligations from its license that run until 2034. The Sky deal does not change that.
Tom Harrington, a TV analyst from Enders Analysis, says ITV’s free-to-air is also likely to be one of the main reasons for the potential deal. “ITV remains profitable and the reach it has as the major commercial broadcaster is probably the main reason it would be attractive to Comcast/Sky”.
However, Sky’s focus could increasingly shift from ITV’s broadcast offering to its online streaming platforms – and could eventually see ITVX and NOW TV merge.
“Online video advertising remains a key area for growth as audiences increasingly turn to the convenience of the expansive catalogs available to them via streaming. As such, monetizing this space is essential to broadcasters’ ongoing strategies,” said Peter Ingram, head of research at Ampere Analysis.
“A sale of ITV to Sky is likely to lead to an acceleration of the development (and possible integration) of streaming propositions such as ITVX and NOW with a focus on expanding online video subscription and advertising revenue,” he added.
In other words, expect ITVX and its ITVX Premium subscription to become the primary focus for Sky. Not that traditional broadcast TV will stand in the way.
“ITV’s linear operations could be rationalised, but key assets will remain to continue to monetise the still significant audience loyal to linear TV”, added Peter Ingram.
What could this mean for current TV series?
Major changes for ITV or Sky viewers are unlikely in the short term due to existing agreements and contracts. But one thing you can expect to see is more ITV shows on Sky and vice versa.
“An immediate effect of a combination could be an element of integration of Sky and ITV’s programming assets,” predicts Peter Ingram of Ampere Analysis.
“The two companies are among the highest content consumers in the UK, with ITV providing a range of locally resonant shows, news and sports rights. Sky provides local and international first-run and library film and TV series, major sports rights (such as Premier League football) and news. The two operators could use some of these programming assets across a combined entertainment power ecosystem,” he added.
However, Tom Harrington of Enders Research told us before finalizing the deal that changes could be more of a slow burn. “From a viewing perspective, in the short term there probably wouldn’t be many noticeable changes: the ITV and Sky offerings would remain the same,” he said.
“Over time, Comcast/Sky may have different opinions to the current ITV management on how to monetize free-to-air and there may be channel changes and a different approach to ITVX,” he added.
The nature of the deal – which does not include ITV’s production arm, ITV Studios – could also ultimately affect the kind of shows you watch on its channels. ITV Studios produces shows such as Love Island and I’m a celebrity… Get me out of here and The voice. They could one day find another home, some analysts predict.
“The biggest customer at ITV Studios is ITV itself, and more than half of all ITV’s viewing is from shows it makes itself at the Studios,” Harrington explained. “So if Comcast/Sky were to acquire ITV broadcasts, then we would assume that would include a long-term agreement that guaranteed the flow of content from ITV Studios to the channels/ITVX,” he noted.
“However, even with some kind of agreement, one could foresee over time that the relationship between these two parts would weaken from the current level,” he said.
Is this good or bad news for TV viewers?
It is still too early for final conclusions about the agreement. However, experts have highlighted three potential effects that are broadly good, bad or mixed.
Based on past mergers, there is cause for some concern about TV quality, according to Tom Harrington of Enders Research. “Generally in a merger/acquisition like this, the result is that less content is produced overall, as savings and efficiencies are immediately sought. So overall there may be less on offer – although this is not necessarily obvious to the viewer,” he said.
Still, on the plus side, the TV shows being made may be more widespread. “You can imagine that Sky might want to use Sky programming on ITV and vice versa. So certain viewers can get access to shows and sport that they might not have had access to before,” he added.
Ampere Analysis’ Peter Ingram is also slightly more optimistic about the long-term health of TV programming on both ITV and Sky. “The increased scale provided by the group’s presence across TV and streaming will facilitate an even stronger revenue base, allowing for the production of more original, high-quality programming for UK consumers,” he predicts. Let’s certainly hope so.
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