Dana Strong: Sky-ITV will be ‘UK streaming champion’

Sky chief exec Dana Strong has called on UK government and regulators to “quickly” approve its takeover of ITV’s broadcast business so it can “get on with creating a national streaming champion” capable of competing with global tech firms.

The £1.6bn landmark deal has been in the works for more than nine months and will bring Comcast-owned Sky together with the channels and streaming business of ITV, while ITV Studios remains a standalone business.

Strong told a media call this morning she had been encouraged by a recent green paper from the UK government outlining plans to improve prominence on social media such as YouTube, but said ushering the ITV-Sky deal through regulatory hurdles quickly would be key in a “fast-changing” media landscape.

“To compete with the big globals, we need the local scale and organisation that an ITV and Sky tie-up brings” Strong said, in response to a question from Broadcast.

“Simply put, the support we need from government is to approve the deal and to approve the deal quickly so we can get on with it.

“We think they are looking at the right things in regards to prominence but one of the best solutions in front of us is to make sure Sky is able to take advantage of this tie-up, quickly blend our services into a national streaming champion and provide a new innovative service for consumers in the UK.”

Strong emphasised the deal is founded on keeping UK content front-and-centre to audiences, talking up the £2.1bn content supply agreement, the pay-TV giant has arranged with ITVS, guaranteeing ITV programming favourites to remain on the broadcaster. 

“Sky and ITV will remain deeply British – our entire strategy is on creating UK cultural moments that matter,” she said. “We think this is an important differentiator with the global streamers.”

The deal is expected to take around 12 months to complete and Strong said that while the combined entity deal will command around 6.5% of the UK’s advertising spend, it remains small change compared to the amounts spent with US-based tech giants.

Comcast-owned NBCUniversal’s tech stack from streamer Peacock – originally built on Sky tech – will be used to drive opportunities for viewers and advertisers of ITVX, although Strong was adamant the enlarged organisation would remain open to greater PSB collaboration.

Sky already partners with Channel 4 and ITV on Universal Ads, a service allowing smaller businesses to buy TV campaigns, but calls have been growing to combine UK-based BVoD services onto a single platform to better compete with streamers such as Netflix and tech giants.

Strong dismissed pulling back from further PSB collaboration when asked by Broadcast, saying: “We and the industry feel partnerships are a critical asset for us all to make sure we can offer advertisers choice and really good products that will drive and command their ad dollars to us versus some of the alternative big tech players.

“We see partnership as being source of strength and want that to continue.”

She added she did not see the deal impacting Channel 4 because it is targeting “a younger demographic” compared to ITV’s “mainstream” appeal.

Jobs, news and sport

Strong used the 30-minute call to outline how she expected the combined company to operate, with £200m synergy savings within three years expected. Most of that will be from reduced marketing, tech spend and non-UK content investment – of which ITV invests around £100m a year – but “a minority” will come from job losses, with corporate and commercial functions set to be affected.

The Sky chief exec said it was “far too early” to discuss how content-focused reporting lines would operate, a line reiterated by Sky content and Sky Studios and ad chief Cécile Frot-Coutaz when asked about joint commissioning teams.

Frot-Coutaz did, however, note the takeover is “about maintaining commissioning commitments, that is very much why we’re doing the deal.”

There was more detail on the future of sports coverage between the two brands, with Strong confirming ITV free-to-air tentpole sports such as Six Nations rugby would not be put into Sky’s pay tier. Instead, she wants “to drive fandom and engagement”, potentially using select sports events and ITVX to create a “flywheel” that delivers increased revenues from Sky.

“We’ll be leveraging ITV and NBCU to provide more connected viewing and that will generate revenues and a nice opportunity for a free ad-supported streamer with paid tiers – that is a good flywheel to push people up into Sky content, with more choice for advertisers and more unique tools for them as well, which will further drive revenues.”

News of today’s takeover comes less than a week after Comcast revealed plans to separate its NBCU media and entertainment division from the broadband and telco operation, and Strong talked up Sky’s “strong existing partnership” with NBCU, pointing to co-produced shows such as The Day of the Jackal and Saturday Night Live UK, suggesting more partnerships would be forthcoming.

She also said Comcast had been an “exceptional owner of Sky”, adding that its commitment to news would remain alongside that of ITV, although providing less detail on the role that news provider ITN would offer. However, ITN has a five-year contract to produce ITV News that runs to 2030 with no break-clause, while ITV’s PSB licence requires peak and regional news, which Sky has said it will honour.

ITN’s ownership will change as a result of the deal, with ITV’s 40% shareholding split equally between ITVS and Sky, alongside existing shareholders Reuters (20%), DMG (20%) and Informa (20%).

Strong added that that news was a “differentiator to some of the global services”, adding that she was “committed” to ensuring ITV News and Sky News retain their “distinct editorial points of view.”