“ITV Studios is not for sale,” said Carolyn McCall, head of British media conglomerate ITV, firmly. Variety three years ago.

Despite persistent rumors that the global production powerhouse was going to be acquired (including potentially by Banijay or RedBird IMI), McCall has remained true to his word.

What few could have imagined at the time was that ITV itself was for sale. On Monday, after months of negotiations, McCall confirmed that the 71-year-old public service broadcaster will be acquired by Comcast-owned Sky in a deal valued at up to $2.1 billion. What’s more, McCall admits that it was ITV who approached Sky; He told investors it was “the top company” to partner with.

Of course, there is every chance that ITV Studios will continue to be sold, despite McCall’s plans for it to be an independent company listed on the London Stock Exchange, and buyers are said to be already circling. And the Sky/ITV deal will have to get through regulators, a process McCall admitted could take up to two years.

But for now, it looks like another UK broadcaster has slipped out of British hands, following in the footsteps of PSB Channel 5, which was acquired by Viacom in 2014, and Sky itself, which was acquired by Comcast in 2018.

Surprisingly, those at the coalface are pragmatic, if not actively optimistic, about the proposal for Sky to take over ITV. “I may be in a small minority here, but I’m actually quite positive about the merger,” said one executive, CEO of an independent production company, who spoke on condition of anonymity. One reason for the optimism, the executive admitted, was that ITV commissions so much from its own group of production companies at the expense of others that “there aren’t many independent companies that bother to submit offers to ITV anymore.” Sky, the executive said, is “more accessible.”

With the spin-off of ITV Studios and the possibility of Sky taking over the startup (although nothing has been decided on this), there could be more opportunities for independent production companies in the long term. In the short term it is less promising, given that one of the terms of the deal includes Sky’s commitment to spend £2.1bn on ITV Studios content over the next five years.

Producer Patrick Spence, who made the award-winning ITV series “Mr Bates vs The Post Office”, was equally positive, telling the BBC he saw the deal as a vote of confidence in linear television. “What I take away from this deal as a producer and audience member is that Sky must really like it and believe that ITV will only buy the network,” he said. “They believe there is a business to grow and drive that utilizes the audience reach and loyalty that the ITV network has.”

Sheldon Lazarus, director of Fulwell-owned factual production outfit Bitachon365, echoed that sentiment. “I’m not worried at all,” Lazarus said. Variety of the potential impact of the agreement on producers. “It’s a true testament to the creativity of this country, because otherwise why would you buy a platform like this?”

Lazarus recalls similar concerns about what was then Viacom’s acquisition of Channel 5, noting, “I think we’re kind of past that.” Three years after that sale, analysts Enders noted that Channel 5 boasted “increased spending on content, development of new titles and clarity around its target audience.”

Now, more than a decade later, the channel continues to thrive, reaching a three-year high in content spending in 2024 while its peers cut their budgets.

Sir Peter Bazalgette, former chairman of ITV, is convinced that consolidation is now the only way for PSBs to survive as they try to compete with US giants such as Google, Disney and Netflix. “National broadcasters across Europe are under considerable pressure not only from streamers but also from YouTube,” he said. Variety.

The figures confirm it. According to UK ratings body BARB, Sky and ITV’s combined share of UK TV and streaming viewing was 17.7% in May (the most recent figures available) compared to YouTube’s 18.6%.

Bazalgette said it was a situation that UK regulators, led by the government, are starting to accept, which is why the Sky/ITV deal is almost certain to be approved. While Bazalgette acknowledged that Sky and ITV together can dominate the TV advertising market, with a combined share of around 70%, “the reality of how the market operates has nothing to do with that,” he said, with video advertising now fragmented across YouTube, Meta, TikTok and other platforms. In this context, the combined market share of Sky and ITV represents only between 20 and 30%.

Bazalgette believes the deal could be equally beneficial for audiences, given that Sky is one of the UK’s most dominant pay-TV sports broadcasters. “You are combining open sport with paid sport,” he explained. “You could get much more advantageous windows for viewers.”

For Sky, sharing its sports content with ITV could be a win-win as it would benefit from advertising revenue while also being able to funnel viewers towards its pay-TV packages. During a press conference this morning, Sky CEO Dana Strong already confirmed: “We want to put more sport in the wild.” [to-air].”

The independent CEO speculated that there would also likely be a content crossover at some point, with Sky potentially using ITV as a “showcase” for its pay-TV offering (“SNL UK” would certainly be a viable candidate, given its limited ratings opportunities on Sky One, where it currently airs).

Conversely, some viewers expressed concern that their favorite ITV shows, such as soap opera “Coronation Street” and dating show “Love Island,” would end up behind a paywall. However, Bazalgette said he doesn’t think “there’s going to be a big change for viewers”, partly because ITV has a PSB broadcast licence, which runs until 2034, meaning it has explicit obligations on national and regional commissioning. Combined with the ITV Studios production deal (both “Coronation Street” and “Love Island” are produced under Studios), it means they are guaranteed to be free-to-air, at least for the foreseeable future, a fact Strong reiterated publicly. But again, the question is what will happen when those agreements expire.

It’s a question that bothers Stewart Purvis, former chief executive of ITV’s contracted news producer, ITN, and Ofcom’s partner for Content and Standards. Unsurprisingly, given Purvis’s background, he is particularly interested in the future of Sky and ITV news production. While Strong has committed to keeping the newsrooms separate at least until 2030, when ITV’s contract with ITN expires, Purvis remains cautious. “It’s all very well saying these contracts exist, but do they necessarily stop a merger? [of the newsrooms]?”

To complicate matters further, ITV owns a 40% stake in ITN, which it says will be split between Sky and ITV Studios, a factor that also worries Purvis. “I’m going to put pressure on the competition authorities to understand what safeguards can be taken,” he said.

Purvis was keen to clarify that it is not “un-American”, but maintained that it would be far from ideal for the majority of UK PSBs to be owned by US companies, particularly given that the US media landscape is itself so volatile. “We simply have no idea who will own each of these networks tomorrow,” he said. Given that Comcast itself is set to create NBCUniversal as a separate company (one that’s ripe for acquisition), it’s not an unreasonable consideration.

Although two US-owned PSBs may not seem like a lot, that number represents 50% of PSBs across the UK. The remaining two – Channel 4 and the BBC – are publicly owned and face an uncertain future. Channel 4 narrowly escaped privatization under a previous government, while the BBC, whose top job has just been filled by a veteran Google executive (Matt Brittin), is desperately cutting jobs and budgets as it tries to shore up funding.

Perhaps that’s why, shortly after revealing the deal, McCall was grilled by financial and business journalists during a media call, who demanded her opinion on everything from the “Americanization” of British television to why companies are leaving the London Stock Exchange (last week, low-cost airline EasyJet, which McCall also happened to run, agreed to a takeover by an American investment firm).

In the UK media, the initial reaction to the Sky/ITV deal was certainly grim: more consolidation and more US imperialism (in a twist of fate, news of the Sky/ITV deal came less than 48 hours after the US celebrated its 250th Independence Day), along with potentially fewer companies listed on the London Stock Exchange and fewer jobs, something Philippa Childs, head of the Bectu crew union, said. addressed in a statement demanding “assurances that there will be no job cuts or terms and conditions.” as a result of this acquisition.”

Both Strong and McCall acknowledged there would likely be some job losses at both Sky and ITV, although they said they would likely focus on marketing and technology.

What is more worrying for North American distributors is that both also said cuts would likely be made to “non-UK content”, into which ITV invests around £100m a year.

With a closed portfolio of US content through NBCUniversal, there would be little need to look elsewhere (although, interestingly, a look at ITV’s schedules across its four networks this week showed that its US content was already predominantly represented by reruns of the NBCUniversal “Real Housewives” franchise).

At least in the UK, producers are trying to look on the bright side. “Is commissioning going to be reduced? Well, commissioning is being reduced anyway,” said the independent CEO. “Personally, I would rather have a healthy ITV and Sky commissioning something rather than both going bankrupt.”

It was almost 20 years ago that Sky, then still owned by Rupert Murdoch’s News Corp, first attempted to take over ITV, prompting a punitive response from regulators. Today, a testament to the almost unrecognizable media landscape, they will almost certainly approve.

“This transaction is a pragmatic response to a changing market rather than a transformative bet,” explained Giao Pacey, partner at leading media and entertainment law firm Simkins LLP. “The key question now is whether regulators are willing to accept that creating a stronger media champion in the UK can be achieved without compromising competition, consumer choice or media plurality.”