ITV is set to update investors on recent trading next Wednesday as it faces investigations into the £1.6 billion deal to sell its media and entertainment division to Sky, after the Culture Secretary intervened over public interest concerns.
Lisa Nandy formally stepped in, triggering probes by the Competition and Markets Authority (CMA) and regulator Ofcom. The regulators have a deadline of January 27 to report back to her on the deal's impact on media plurality in the UK and free speech.
Regulatory Scrutiny and Strategic Shift
The broadcaster, known for hit shows such as I'm A Celebrity... Get Me Out Of Here, will release its latest quarterly figures amid questions about what the scrutiny could mean for the deal and whether it could delay completion.
Russ Mould, AJ Bell investment director, said: "ITV is hoping to change the channel and start a new season with a fresh cast by selling off its broadcast business and concentrating on TV production."
He noted that the move would remove ITV's reliance on advertising spend, which is heavily linked to economic fluctuations and has an outsized impact on investor sentiment. However, he said Ms Nandy's intervention has "upset the applecart."
"At the very least this could delay any deal from getting across the line," he added. "Management will be expected to address concerns that this might scupper its shift in strategy and what it might do if the deal ends up being blocked."
Deal Details and Financial Outlook
Ms Nandy will also bring forward new streaming legislation in response to her "specific concerns" over the tie-up, ensuring the public interest test can apply to on-demand programmes as well as broadcasting.
ITV agreed in July to sell its media and entertainment division to Sky, a move that would create a major competitor to global streaming giants. The sale includes ITV's terrestrial TV channels and streaming service ITVX, but excludes its production arm, ITV Studios, which produces shows including I'm A Celebrity and dramas such as Mr Bates Vs The Post Office.
The group's update on Wednesday will be watched for signs of a pickup in revenues and profits after ITV said its performance would be weighted to the second half due to scheduling of shows and licensing deals.
In July, ITV cautioned that advertising revenues were set to fall around 5% year-on-year in the third quarter due to macro-economic headwinds. This comes despite a boost from the World Cup in July, which helped advertising revenues lift 3% in the previous three months.
In its first half, ITV saw pre-tax profits increase by 16% to £78 million as total group revenues rose 2% to £1.89 billion.
