City analysts have suggested a sum-of-the-parts valuation of ITV could yield figures significantly higher than its current share price. This analysis centers on ITV’s two main divisions: ITV Studios, known for producing popular programs like “Coronation Street,” and its broadcasting segment, which sells advertising slots. Recently, Sky, owned by Comcast, has approached ITV with a £1.6 billion offer for its broadcasting division. Despite a 16% increase in ITV’s share price following this news, it remains under the theoretical valuation indicators.
Three challenges complicate this potential transaction. First, the proposed £1.6 billion offer may be viewed as modest, considering the broadcasting division generated £250 million in operating profits last year, even amidst competition from platforms like Netflix and YouTube. Analysts may question whether this is the maximum value that could be extracted from the broadcasting unit.
Second, regulatory scrutiny could pose significant challenges, particularly given that the merger would unite the UK’s leading free-to-air broadcaster with a major pay-TV player. The competition regulator is likely to analyze the implications of such consolidation in the marketplace.
Lastly, the implications of US ownership raise questions about the identity and responsibilities of Sky under Comcast. There are concerns about how a merged entity would handle its public service obligations, especially regarding original UK content.
ITV faces substantial competition in the advertising revenue market, which is anticipated to decline by 6% over the coming year, creating an uncertain environment for its broadcasting division. Although the broadcasting unit has demonstrated resilience over the past decade, the growing presence of digital competitors and the evolving landscape of media may further challenge its value proposition. Additionally, regulatory and political hurdles could complicate or even hinder the proposed transaction with Sky.
Source: https://www.theguardian.com/business/nils-pratley-on-finance/2025/nov/07/itv-talks-to-sell-television-business-to-sky