By Rob McLaren, Insight Manager
Few announcements have rocked the media world in recent times quite like this one. Comcast, parent company of Sky, is in talks to acquire the media and entertainment arm of ITV.
They say 70 is the new 50, and that certainly rings true for this proposed merger. ITV celebrated its 70th anniversary this September and, with it, the 70th anniversary of the first TV advert to hit UK screens. The Sky-ITV merger, if it comes to fruition, would represent one of the biggest commercial broadcasting shake-ups in the seven decades since. The proposed £1.6bn deal still faces major regulatory challenges but, if it clears those hurdles, would lead to around 70% of UK TV ad revenues being controlled by a single entity.
Still, those hurdles are numerous, and passage is far from certain. For one, the combined entity would command a near-monopolistic position in the broadcast ad market, where ITV and Sky are currently the primary and secondary forces. This will likely trigger intense scrutiny from both the media regulator, Ofcom, and the UK’s Competition and Markets Authority (CMA).
Indeed, previous merger attempts involving both companies have been blocked on similar grounds. In 2018, Fox’s proposed takeover of Sky was blocked on the grounds it would give the Murdoch family too much control over UK news providers. Earlier still, BSkyB – as it was then known, prior to its acquisition by Comcast – was ordered to reduce its stake in ITV on monopoly grounds.
Furthermore, an acquisition by the US-based Comcast may be challenged due to ITV’s status as a public service broadcaster, particularly given that its 40% stake in news provider ITN is included as part of its media and entertainment arm.
Should the proposed deal succeed, its impact on advertisers would be mixed. Ian Daly, Head of AV Investment at the7stars, highlights a benefit. ‘Combining Sky’s addressable advertising technology with ITV’s mass reach to create a single, data-driven proposition [helps keep] UK TV ad budgets within the domestic ecosystem, rather than losing them to Google and Meta.’
However, the deal is also fraught with risks. The dominant market position of a combined Sky-ITV entity could, Daly projects, lead Comcast to ‘use its new market power to push up prices for advertisers’.
Though ITV’s broadcasting arm remains profitable, its CEO Carolyn McCall has forecast that, just as they did in Q4 2024, its ad revenues will decline by high single digits in the final quarter of this year. That Sky has come back for another bite at the ITV cherry suggests that it believes the threat to broadcasting revenues is significant enough to warrant a combined business.
As the7stars Founder, Jenny Biggam, recently told Campaign, ‘a single point of sale could finally make planning and buying across platforms more streamlined, with more joined-up targeting and measurement’. Such a development could help to safeguard broadcast ad revenues for years to come.
However, like the proposed mega media mergers that came before it, the only certainty in the Sky-ITV deal is that much uncertainty remains. As Biggam concludes: ‘The real test will be whether this move genuinely modernises TV trading, something many of us think is well overdue.’
