Sky and ITV mount defence of £1.6bn merger as regulators probe deal
Sky and ITV will argue their proposed £1.6bn merger controls only around a fifth of Britain’s advertising market as they seek to convince competition regulators to approve one of the biggest media deals in decades, City PM understands.
The Competition and Markets Authority (CMA) on Wednesday invited comments on Sky’s planned acquisition of ITV’s Media and Entertainment division, marking the first stage of its review of the transaction before a formal Phase 1 investigation begins.
The companies are expected to argue the deal should be assessed against today’s broader advertising market, rather than television advertising alone, according to people familiar with their position.
City PM understands Sky and ITV together account for roughly 20 per cent of total UK advertising spending once broadcast television, streaming services, social media and digital platforms are included.
That contrasts sharply with a traditional television advertising market definition, under which the combined business would account for around 70 per cent of sales – likely to become one of the central issues in the CMA’s assessment.
An ITV spokesperson said: “We welcome the CMA’s decision to open its public case page. This invitation to comment is the first part of the CMA’s information gathering process and the start of the regulatory review for the sale of ITV’s M&E division.
“Together with Sky we are working closely with the CMA, Ofcom and DCMS to support their respective processes and we are confident that regulators will recognise the fundamental changes that have taken place in our markets as they examine the proposed transaction.”
Sky did not immediately respond to a request for comment.
Ad market concentration under scrutiny
The CMA said it was seeking views on whether the acquisition could reduce competition before formally launching its investigation.
“The TV industry contributes billions to our economy so it’s important we assess the impact of this deal on competition,” a CMA spokesperson said.
“Strong competition helps make sure businesses can buy advertising on fair terms and viewers can continue to enjoy a wide choice of high-quality TV programmes.”
The watchdog is accepting submissions until 6 August after receiving the information needed to begin pre-notification discussions with the companies.
The regulatory process is expected to focus heavily on how the ad market is defined.
Analysts at Enders Analysis said the key competition question would be whether regulators continue to treat television advertising as a standalone market or reflect growing competition from YouTube, Netflix, Amazon, Meta and other digital platforms.
They argued a broadcaster-only definition is now “anachronistic” given the shift in advertising spending towards online platforms.
Giao Pacey, partner at Simkins, said the transaction was “one of the most significant developments in the UK media sector for many years.”
“The deal feels less like opportunistic consolidation and more like an acknowledgement of market reality,” she said.
“The key question now is whether regulators are prepared to accept that creating a stronger UK media champion can be achieved without compromising competition, consumer choice or media plurality.”
Sky agreed earlier this month to buy ITV’s broadcast and streaming business for up to £1.6bn, leaving ITV Studios as a separately listed production company backed by a long-term content supply agreement.
The transaction is expected to complete in the second half of 2027, subject to regulatory approval.