ITV has agreed the sale of its media and entertainment arm to Sky for up to £1.6 billion after months of talks over a possible deal.
The companies said the deal will combine the division with Sky to create a major competitor to the global streaming giants.
They have been in talks since late last year in a bid to hammer out the terms of a sale, which is set to be transformative for UK television.
The sale includes ITV’s terrestrial TV channels and streaming service ITVX.
But it does not include its production arm, ITV Studios, which makes shows including I’m A Celebrity and the popular drama Mr Bates Vs The Post Office.
ITV Studios will become a “pure-play global content business” with its shares listed on the London Stock Exchange following the sale, and a long-term agreement to supply content to the newly-combined Sky and ITV, according to the broadcaster.
This includes programmes popular with the British public like Love Island, I’m A Celebrity, Coronation Street and Emmerdale.
Sky has committed to spending at least £2.1 billion over 2028-2032 on the partnership.
Under the terms of the deal, Sky will pay £1.2 billion for the broadcasting unit and sell its Love Productions business to ITV, which makes shows including the Great British Bake Off and The Piano, and is valued at £200 million.
ITV may also receive a payment of up to £200 million in two years’ time subject to its advertising sales performance.
The firms said the combined business will have a bigger content budget, the resources and technology to better compete with global streaming platforms in the UK.
Sky is owned by US media giant Comcast which is in the midst of plans to split into two companies, and will see Sky’s European business become part of NBCUniversal.
Dana Strong, Sky’s group chief executive, said: “Bringing Sky and ITV Media & Entertainment together combines the very best of free-to-air television, pay TV and streaming, ensuring viewers across the UK continue to enjoy outstanding British programming in a rapidly changing world.
“ITV will remain a public service broadcaster at the heart of British life, and we’re excited about the future we can build together.”
She said the takeover was a “defining moment for British media”.
Andrew Cosslett, the chairman of ITV, said that “at a time of rapid change in the industry, it is right that we now secure ITV’s crucial role as a public service broadcaster” and that the combined business will “create a UK champion with the scale and resources to better compete with global streaming platforms”.
British broadcasters including ITV, BBC and Channel 4 have developed their streaming platforms in a bid to compete with US giants like Netflix, Amazon and Disney – which have transformed the way that people watch TV around the world.
