UK culture secretary triggers CMA, Ofcom review of Sky’s $2bn ITV deal

UK culture secretary Lisa Nandy has launched a formal intervention in Sky’s £1.6bn (US$2.16bn) takeover of ITV’s broadcasting business.

Lisa Nandy

Comcast-owned pay TV operator Sky struck a deal in July to buy ITV’s Media & Entertainment (M&E) business for up to £1.6bn, with ITV Studios emerging as a standalone content business listed in London.

The deal would see Sky, in effect, buying ITV’s licence to broadcast, so it will adhere to all the regulatory restrictions that come with it: the amount of national and local news at peak, the 25% spend on independent production and commissions outside London. These will continue post-merger until at least 2034, when that licence comes up for renewal.

ITV Studios will operate as a separate business and be listed on the London Stock Exchange but will enter into a long-term content supply agreement with ITV M&E and Sky, covering programmes and formats including Coronation Street, Emmerdale, Love Island, I’m a Celebrity… Get Me Out of Here! and its daytime slate.

However, Nandy said in October that she was minded to intervene in the deal, and that position was formalised on Wednesday.

Nandy has issued a Public Interest Intervention Notice and asked the Competition and Markets Authority (CMA) and UK media regulator Ofcom to provide reports on the impact of the deal by January 27. Following that, she will decide whether to refer the deal for a more detailed investigation by the CMA.

Chief among her concerns is the effect the move would have on the range of news options open to UK viewers.

While Sky News and ITV News attract an audience share of just 26% between them, and other news sources like the BBC and Channel 4 are available, Nandy’s October letter expressed concern that soon 86% of news viewing would be divided up between just two entities: the BBC and the merged ITV and Sky.

Nandy is also concerned about the number and range of people owning broadcasters in the UK and the need for “sufficient plurality of persons” with control of the media. She intends to modify the existing legislation on the need for the availability of a wide range of broadcasting to cover on-demand and streaming programming too.

Nandy said: “The legislation already specifies a public interest consideration on the need for the availability, throughout the UK, of a wide range of broadcasting which is both of high quality and calculated to appeal to a wide variety of tastes and interests.

“As I explained in my written statement dated October 15, I believe this consideration should be modified to apply to on-demand programmes as well as broadcasting in line with modern viewing habits and my specific concerns regarding this merger.”

A Sky spokesperson said: “We note the secretary of state’s decision to issue a Public Interest Intervention Notice and look forward to engaging constructively in the review. Bringing Sky and ITV Media & Entertainment together will create a stronger British media business, better equipped to compete with global streamers, support British content and deliver more for viewers.

“We believe the transaction is in the public interest, with clear commitments already made to protect ITV’s identity, public service broadcasting obligations and the distinct editorial voices of Sky News and ITV News.”

A spokesman for ITV added: “We look forward to co-operating fully with the CMA, Department for Digital, Culture, Media and Sport and Ofcom in the review and will respond formally to the public interest intervention notice.”

Speaking at the Edinburgh TV Festival in August, ITV M&E MD Kevin Lygo was at pains to stress it was “business as usual” at his channel despite the takeover, and that “Sky wouldn’t be buying us for all that money to destroy us and change what we are.”