ALEX BRUMMER: UK television jewel ITV under threat
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The phenomenal rise of streaming and social media sites such as YouTube and Netflix has transformed viewing habits in Britain, the US and across the globe.
It also opened the door to bids and deals as the giants of the film, broadcasting and cable industries circle each other looking for survival strategies.
In this world of multi-billion-pound deals, Britain's commercial broadcaster ITV is a mere bagatelle. Warner Bros Discovery recently turned down a £44billion bid from David Ellison's Paramount.
Under pressure from investors, because of a lagging share price, ITV's chief executive Carolyn McCall searched for solutions. An easy answer, it appeared, was to sell or merge the UK network's sizzling production arm, ITV Studios.
That has proved tricky, so instead McCall and Sky boss Dana Strong have come up with a different idea.
Bringing ITV's entertainment channels, news and streaming service ITVX together with Sky's subscription services would create a British champion. A deal would offer a gateway to Netflix, Paramount and Sky's rich sporting heritage. There is one problem. Sky is not British – it is owned by Brian Roberts' US behemoth Comcast.
Jewel in the crown: But in this world of multi-billion-pound deals, Britain's commercial broadcaster ITV is a mere bagatelle
So, if a deal were to be consummated, an important part of creative Britain – with a seven-decade heritage – would pass into foreign hands.
Command and control would effectively pass to Philadelphia. That is unless smart investment bankers could find a way of giving the enterprise a London quote to go along with an HQ.
Roberts, controlling shareholder in Comcast, overpaid for Sky after an auction with Rupert Murdoch's 21st Century Fox in 2018. Since then, Sky has lost lustre.
A relationship with feeder Sky Atlantic channel, Warner-controlled Home Box Office, is under threat. ITV's big entertainment shows Coronation Street, Love Island and the rest ought to offer a one-stop shop for consumer advertising, under constant threat from Google, Amazon, YouTube and others.
Regulatory hurdles are high, although McCall is confident they can be overcome. Ofcom would require Sky to accept public broadcast obligations including detailed prescriptions for regional programming, such as minutes devoted to Welsh news. How ITV's news operation would be combined with Sky's 24-hour news service is among issues to be settled.
If a transaction is to progress as designed, McCall and Strong would also need to convince Sarah Cardell, chief executive at the Competition & Markets Authority (CMA), that it would not diminish consumer and advertising choice. The parties are hopeful that Labour's growth objective, with the call for quicker scrutiny, would work in their favour.
The CMA would need to be convinced that looking at the TV market alone is not sufficient at a time when younger viewers and advertising are deserting terrestrial TV for YouTube, TikTok and elsewhere.
A deal with ITV, valued at £1.6billion, would give Sky access to popular programming, premier UK advertising space and a smart, fleet-of-foot news operation.
Comcast also has engaged Goldman Sachs and Morgan Stanley to look at buying Warner Bros Discovery's enormous studio and streaming businesses. That shows the group's true centre of gravity.
ITV shareholders are excited at a get-out-of-jail card, with shares up 16.6 per cent in latest trading. There are questions about the long-term safety of an independent, quoted great British broadcaster as the distant offshoot of an American-focused giant.
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