‘The UK Requires Some Media Independent of US Control’: The US Giant's Move for ITV Sharpens Minds

The prospect of the American media conglomerate acquiring ITV has prompted worries about the consequences on the UK's public service broadcasting, a reality that Channel 4’s new chief executive, who previously held a high-ranking position at Sky, will be acutely aware of.

Sky’s advertising chief, Priya Dogra, will now be tasked to take a leading role to block her former employer’s acquisition bid to defend Channel 4.

The potential merger of Sky and ITV’s TV business would leave Channel 4 a much smaller player in the realm of TV and digital ad sales, reviving talk of the need to revisit some form of tie-up with the BBC for future viability.

Foremost Worry: The Future of News

However, it is the possible consequences on the future of news output that are causing the most immediate alarm for many within the television industry.

The surprise news last month that Comcast, which controls assets including Universal Studios and acquired Rupert Murdoch’s Sky for £30bn in 2018, is a logical business move. Traditional broadcasters are facing a profound survival challenge as audiences and revenues continue to rapidly migrate to global digital players such as Meta, Google, Amazon, and Netflix.

“Comcast’s move for ITV is causing trepidation among media watchers, with specific worry for news provision.”

However, the potential £1.6bn purchase of ITV’s broadcasting arm and streaming service, which would end 70 years of autonomy, is riddled with regulatory, political, and competition problems.

At a stroke, Comcast would control Sky News and ITV News—including its extensive regional news operation—and become the biggest shareholder in ITN, which produces news for ITV, Channel 4, and Channel 5.

While Comcast’s 40% stake in ITN would not be a controlling stake—other shareholders include the owner of the Daily Mail, Thomson Reuters, and Informa—it would still be heavily involved in the news output of most of the main non-BBC broadcasters.

“If a deal materialises, the fate of ITN is an critical one that will focus minds politically,” notes one senior TV executive. “Effectively, they will be involved in the news output of all the biggest non-BBC channels.”

Financial Commitments and Regulatory Scrutiny

Comcast guaranteed to keep funding Sky News for a decade, increasing its funding annually in line with inflation, as part of its 2018 takeover of Sky. As that assurance draws closer to concluding, concerns have been raised about whether the US company will continue to fully fund Sky News, which has an annual budget of £100m but is thought to lose money of as much as £80m.

It is understood that any deal to buy ITV would include pledges not to seek permission from media regulator Ofcom to vary the conditions of its public service broadcast licence, which includes duties to national and regional news.

“There are certainly questions about media diversity,” says Stewart Puvis, a former ITN chief executive. “Theoretically, Comcast could, say, merge Sky and ITV News and use its position as a 40% shareholder in ITN to assert control... I would hope Comcast understand ways of solving these problems.”

A System Under Threat

British TV executives have previously cautioned about the risk posed to the UK’s system of public service broadcasters (PSBs) by large parts of the industry being acquired by US corporations.

Recently, Ofcom published a report warning that public service television, such as news provision and UK-focused content, risks becoming an “threatened entity” as viewers migrate to US online platforms and streamers.

The watchdog also revealed data showing that YouTube had overtaken ITV to become the UK’s second most-watched media service, behind only the BBC, with it and Netflix now the two most popular first TV destinations among young people.

Strategic Imperatives

There are those who believe that a Sky takeover of ITV, against the landscape of the viewer shift to mostly US digital companies, heralds the need for closer collaboration between the UK’s biggest broadcasters.

“The UK wants and needs its own part of mass media which isn’t US controlled,” says a second broadcasting executive. “It’s a key national priority. I think the government needs to work out how the boards of the PSBs have a new part to their remits that requires them to collaborate.”

Given that advertisers follow eyeballs, a combination of Sky and ITV could create a British TV and streaming titan, with the two companies’ sales houses controlling a dominant share of total ad spend on traditional TV and broadcasters’ streaming services.

Regulatory Hurdles

Any deal will trigger an investigation by the UK competition watchdog. Sky is hoping the regulator will widen the scope of the ad market to include the impact of giants like YouTube and Facebook.

“I think it will get passed,” says Alex DeGroote, a media analyst. “Comcast will do everything it can to say it will maintain the PSB status quo... But you don’t buy to ultimately keep everything the same. ITV plus Sky would give them a hugely dominant position in the TV ad market.”

The Precarious Position of Channel 4 and the BBC

Channel 4, which relies on advertising for the vast majority of its income, now faces a diminished BBC as a potential partner and a formidable commercial threat from a combined Sky-ITV.

“We may at some point end up in that situation because of the deep cumulative cuts to the BBC’s funding and because Channel 4, too, has a inherent financial issue,” says Patrick Barwise, an emeritus professor at London Business School. “Channel 4 has repeatedly defied expectations, but that is just delaying the inevitable. It’s now beginning to reach its limits.”

The ongoing saga emphasises a larger question for British media: how to safeguard a distinctive voice and a robust public service ecosystem in an increasingly globalised and digitally dominated landscape.