Sky talks could leave ITV Studios independent after potential channel sale
If ITV sells its free-to-air channels and streaming platform to Sky, ITV Studios would remain a standalone asset and investors would refocus on studios growth and valuation. Thursday at 9: 14 a. m. ET, CEO Carolyn McCall spoke on an earnings call that included an update on ongoing talks with Sky and the company’s 2026 guidance.
Immediate effect: Media & Entertainment sale would shift revenue mix at ITV
The most immediate change would be to ITV’s revenue profile: ITV’s Media & Entertainment unit still accounts for around half of group revenue, and the potential sale being discussed at a price near £1. 6bn would remove that chunk from the group’s top line. In 2026 ITV reported revenue of £3. 5bn and management flagged an unfavourable revenue mix that is expected to push full-year cash profit margins to the lower end of its 13–15% target range.
Studios growth and profitability become the central valuation driver for investors
As a consequence, ITV Studios would take on outsized importance for future value: studios revenue grew 5% in 2026, helping offset weaker advertising and contributing to the group’s 1% overall revenue rise. Underlying cash profit (EBITA) fell 3% to £531mn in 2026, and free cash flow declined from £325mn to £187mn, making operational performance at ITV Studios the primary path for near-term shareholder returns.
Carolyn McCall frames talks with Sky and deflects consolidation concerns
On the call, Carolyn McCall said the company is “actively engaged with Sky” about the possible sale and reiterated confidence in ITV Studios’ scale and diversification. McCall also said the recent Banijay–All3Media combination will not affect ITV Studios’ growth, adding that ITV Studios is “probably two and a half times the size of All3Media, ” a comparison she used to underline ITV’s competitive position.
Still, management flagged weaker advertising in the Media & Entertainment business, noting the prior year benefited from the 2024 men’s Euros. Digital advertising was singled out as a growth avenue: ITV expects digital advertising revenues to exceed £750mn by the end of 2026, up from £482mn in 2024, which could lessen reliance on broadcast ad sales if the channels unit is sold.
Who gains and who faces new questions after a Sky-led reshuffle
If the channels and streaming platform move to Sky at the discussed valuation, buyers and shareholders face immediate trade-offs. The sale would give ITV balance-sheet flexibility—the group’s net debt rose from £431mn to £566mn in 2026—but it would also leave studios as the primary cash-earning engine and potentially open ITV Studios to bids from other buyers, shifting strategic options for Julian Bellamy and studio leadership.
That shift would also change commercial dynamics for advertisers and digital partners: stronger streaming hours on ITVX were cited as driving double-digit streaming growth and higher digital ad revenue flows, but removal of the free-to-air channel portfolio would alter where advertisers buy airtime and how ITV monetizes its content across platforms.
For now, ITV retains shareholder payouts: a final dividend of 3. 3p per share was announced, taking the full-year total to 5. 0p, in line with the prior year, underscoring management’s intent to balance returns while pursuing strategic options.
Progress on the Sky discussions is likely to be the main driver of market sentiment in the near term, and no timeline for a deal was confirmed as of 9: 14 a. m. ET. If talks conclude on the discussed £1. 6bn price, investor focus would likely shift to studio-led growth and valuation adjustments within the near term.
