By Amy-Jo Crowley and Paul Sandle
LONDON, Feb 12 (Reuters) – Comcast-owned Sky’s talks with ITV about buying its broadcast channels and streaming platform have slowed in recent weeks, three people with knowledge of the matter said, as the battle to buy Warner Bros Discovery disrupts the industry.
ITV, home to “Coronation Street” and “I’m a Celebrity…”, said in November it was in talks to sell its Media and Entertainment unit to pay-TV group Sky for 1.6 billion pounds ($2.18 billion).
The tie-up aims to create a top-three UK streamer to compete with Netflix, YouTube, Amazon Prime Video and Disney+.
There has been a lull in engagement from Comcast’s Philadelphia headquarters, two of the people said. “They have slowed in recent weeks,” one of the people said, referring to the talks.
The reasons include complications related to the spin-out of Studios, which makes many of ITV’s biggest shows, two of the people said.
Spokespeople for ITV, Sky and Comcast declined to comment.
TIME-CONSUMING COMPLICATIONS AND QUESTION OF VALUE
Separating out Media and Entertainment, which comprises ITV’s channels and streaming platform ITVX, was proving time-consuming as content arrangements and allocating overheads were worked through, they said. That in turn is making it difficult to value the broadcast unit, they added.
Moreover Comcast, valued at $117 billion, has been weighing how the potential takeover of rival Warner Bros. by Netflix or Paramount Skydance may change the media landscape, they said. Comcast submitted a bid for Warner Bros. last year, but walked away in December.
The potential ITV deal was made public earlier than planned, both sides expected that negotiations would take time, and they have not set out a timeline, a fourth person familiar with the matter said. The four sources spoke on condition of anonymity because the matter is not public.
Negotiations have not halted completely, and a deal is still hoped for, one of the people said. ITV said in November there could not be any certainty on the terms of a deal or whether one would be agreed.
The economic outlook in the UK and investor attitudes to traditional broadcast assets were also weighing on the talks, two of the sources said.
The British economy barely grew in the final quarter, data showed on Thursday. Comcast still sees the UK as an attractive market and is investing in it, highlighted by its plans for its first European theme park near London.
Advertising broadly tracks economic growth but ITV is likely to receive a major boost this summer from the Soccer World Cup in North America.
Its status as a public service broadcaster gives it the right to bid for protected sporting events, something Sky does not have. It also grants it guaranteed prominence on devices.
Comcast spun off most of its cable-TV assets, including USA Network and CNBC, as Versant earlier this year, which has fallen nearly 40% since its market debut in January. This has also been a point of consideration for some of those involved in the talks, one of the people said.
($1 = 0.7327 pounds)
(Reporting by Amy-Jo Crowley and Paul Sandle in London. Editing by Anousha Sakoui and Barbara Lewis)
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