British public broadcasters ITV and the BBC are considering entering into a joint venture worth £1 billion which would see ITV buy half of UKTV, according to a report this morning in The Telegraph. The move is reportedly seen by the two companies as a way to compete with online rivals like Netflix and Amazon Prime.
The BBC held joint ownership of UKTV alongside Scripps Networks Interactive since Scripps bought a 50 percent stake previously belonging to Virgin Media back in 2011, but now has the option to buy out its partner at a set price since Scripps was bought by Discovery earlier this year. The 90 day window to do so expires next week.
The BBC had reportedly been considering full ownership of UKTV, whose channels include Dave, Good Food, GOLD and Watch, but this would require the government to lift the cap on BBC debt. Now however it is mulling over buying out Discovery and immediately selling the stake on to ITV, for a price of up to £500 million.
ITV had been one of the interested parties when Virgin Media was looking to sell its stake back in 2011, but this interest ultimately came to nothing. Now however, it appears that ITV is interested again, as the acquisition would fit with ITV CEO Carolyn McCall’s attempt at a “strategic refresh” for the company, and would generate more cooperation between British broadcasters.
Analysts have speculated that ITV would look to make some acquisitions in the near future, with Liberum Capital suggesting earlier this year that Scottish broadcaster STV might be a target. Reports also emerged back in April that ITV was considering buying Endemol Shine Group.
The purchase of a stake in UKTV would have a few advantages for ITV. It would give the company another way to monetise old content, as it would be able to distribute old and otherwise unused shows across UKTV’s range of channels. The element of cooperation with the BBC may be tempting to ITV as well, at a time when we’re seeing lots of broadcaster alliances emerge to help traditional TV companies fend off digital competitors. ITV has already shown willingness to cooperate with its TV rivals, for example by joining with Channel 4 and Sky for the Big TV Festival earlier this year.
There is no guarantee that this deal will go through however, and so far the BBC and ITV have declined to confirm the plans. The BBC is also looking at other potential partners according to The Telegraph, with Sky also under consideration.