ITV in talks to sell TV, streaming arm to Sky for £1.6bn

British broadcaster ITV said on Friday it was in preliminary talks to sell its television and streaming business to US-owned rival Sky for £1.6 billion ($2.1 billion).

It comes as ITV, which offers free-to-air and paid services, expects advertising revenue to decline about nine per cent in the final three months of the year as businesses pause spending ahead of the UK government’s annual budget in late November.

Sky is owned by US media group Comcast and a deal with ITV would create a heavyweight in UK television and streaming.

ITV, whose share price soared 15 per cent on Friday’s announcement, cautioned that “there can be no certainty as to the terms upon which any potential sale may be agreed or whether any transaction will take place”.

The sale would not include ITV Studios, the group’s production arm.

“The fact the media and entertainment arm has attracted a suitor, rather than Studios, is a surprise,” noted Dan Coatsworth, head of markets at AJ Bell.

“There was a lot of uncertainty over whether anyone would want to relieve ITV of this ball and chain, so to see interest from Sky is Christmas come early for management and shareholders.”

ITV on fourth quarter ended £35 million in cost savings for the fourth quarter as it flagged weak demand for advertising owing to an “uncertain” UK economic outlook.

AFP