ITV confirms it’s nonetheless in talks to promote TV channels to Sky as income dip

ITV has confirmed it is still in talks over a potential £1.6billion sale of its broadcast arm to Sky, as it reported a fall in annual pre-tax profits. 

Should it go ahead, ITV would sell its media and entertainment arm – which includes its TV channels and streaming service ITVX – to Sky, which is owned by US giant Comcast. 

It is thought Sky/Comcast wants to create a UK-focused streaming giant to compete with Netflix, Amazon and Disney.

It came as ITV told investors that revenues were broadly flat, with a 5 per cent dip in its broadcast arm offset by a 5 per cent rise in its ITV Studios business. 

A sale to Sky would not include ITV Studios, the production arm which makes most of the channel’s content such as Coronation Street and Love Island. 

While it remains in discussions, ITV said ‘there can be no certainty as to whether a transaction will take place and an update will be made in due course.’

Talks: The deal would not include ITV Studios, the production arm which makes most of the channel’s content s

ITV said its adjusted pre-tax profits fell by 5 per cent to £448million, which it hailed as a good performance in a ‘challenging market backdrop’. 

Shares rose by more than 3 per cent on Thursday morning following news that sales talks are still ongoing – after it had been reported these discussions had slowed.

Chief executive Carolyn McCall said ITV had created ‘two resilient and attractive businesses’ and ITV is ‘a demonstrably leaner, more agile and increasingly digital business, well adapted to deliver future growth.’ 

In recent years, ITV has faced takeover interest for its ITV Studios arm from Abu Dhabi-backed RedBird IMI, which was considering merging it with its rival All3Media, as well as France’s Banijay Entertainment.

This week it was announced that All3Media will be merged with Banijay in a £6bn deal to create the world’s largest independent production company, behind Peaky Blinders and The Traitors.

In response to this news, McCall said that any deals for ITV Studios would be a case of ‘the right price at the right time’.

‘We’re not going to do something that you might say, is transformative, if it isn’t at the right value for ITV Studios,’ she said.

Richard Hunter, head of markets at Interactive Investor, said: ‘It is possible that the price tag is the cause of the delay and a deal, should it happen, would basically leave the Studios business alone, perhaps itself then vulnerable to a bid, and in a best case scenario with its true value being unlocked by its solitary status.’