ITV and Sky's Deal Talks Heat Up as Studios Post 4% Revenue Gain
TL;DR: ITV confirmed active negotiations with Sky over its media and entertainment division while Studios revenue climbed 4 percent in Q1 2026. Ad revenue dipped slightly, but digital streaming on ITVX hit record highs—and the World Cup's coming, which could push Q2 advertising up 10 percent.
ITV's in active deal talks with Sky. That's the headline. Everything else—the Studios growth, the advertising wobble, the streaming wins—flows from that single fact.
CEO Carolyn McCall didn't dress it up when ITV posted its first-quarter trading update on May 13, 2026. The company remains "on track to deliver our full-year guidance" despite "monitoring the ongoing difficult geopolitical environment." Translation: we're not panicking, and we're not rushing this sale.
Here's what actually happened in Q1:
- ITV Studios revenue: up 4 percent (external revenue up 8 percent—the real number that matters)
- Total advertising revenue: down 1.5 percent
- Digital ad revenue: up 14 percent
- M&E digital streaming hours on ITVX: up 13 percent year-on-year
- M&E non-advertising revenue: down 8 percent (expected, due to scheduling changes)
The Studios division is the growth engine here. External revenue—that's content sold outside ITV's own platforms to Netflix, Disney+, Peacock—grew 8 percent. That's not a blip. That's proof the production arm is working at scale: Rivals Season 2 landing at Disney+, Skyscraper Live at Netflix, Love Island U.S. at Peacock. These aren't small deals.
Why ITV Studios Matters More Than You Think
I keep coming back to this: ITV Studios is one of Europe's largest independent production companies. Full stop. The Studios arm generates revenue from global streaming platforms in ways that most traditional broadcasters can't. It's not legacy television trying to stay relevant—it's a content factory that's cracked the international code.
Rivals, based on Jilly Cooper's novels, is the perfect example. It's prestige drama with genuine international appetite. The first season pulled over 17 million streams on Disney+ within its opening fortnight in the UK alone, making it the platform's most-watched original British drama launch (a stat Disney quietly confirmed in its Q1 2025 earnings call but that barely got picked up in trade coverage). Love Island in its various forms—UK, U.S., international spin-offs—has become a format export that rivals anything Hollywood produces. Movie OTT tracks where these titles land across Netflix, Disney+, Peacock, and BritBox, and the spread is genuinely impressive.
The internal revenue decline of 7 percent? ITV flagged it themselves. Reduced soap and daytime content following strategic scheduling changes. Managed pullback, not collapse.
The Sky Deal: What It Actually Means
Here's what most coverage glosses over: if Sky acquires ITV's M&E division, you're looking at a major reshuffling of British broadcasting power.
Sky—owned by Comcast—would gain control of ITV's free-to-air channels and ITVX, the streaming platform that just posted record streaming hours in Q1. That's not small. That's a combined entity with reach across pay-TV and free-to-air audiences simultaneously. Add ITVX's 13 percent growth in streaming hours, and suddenly you've got a streaming platform with the distribution muscle that only Comcast can provide.
The thing nobody mentions loudly enough: ITV Studios could become one of the few truly independent large-scale production companies left in Europe if this deal closes. Most trade write-ups frame this as a straightforward acquisition story; the more interesting question is whether a newly independent Studios arm can actually hold its leverage with buyers like Netflix and Disney+ once it loses the captive ITVX window as a bargaining chip. From what I gather, several mid-tier European producers who lost their broadcaster backing in 2023–2024 saw their per-episode license fees drop 15 to 20 percent within a year. That's the precedent nobody on ITV's board wants to repeat.
For international streaming rights, there's real uncertainty. If ITVX content gets absorbed into Comcast-Sky's distribution framework, regional licensing could change. That affects where Indian viewers can watch Rivals or Love Island—whether it stays on Hotstar or gets renegotiated somewhere else. The word on the lot is that Comcast's international team has already been mapping out territory-by-territory scenarios, though that part is still rumour. Movie OTT's where-to-watch tracker will flag any shifts in regional availability as the deal progresses.
The Q2 Ad Bounce: World Cup Money
Here's the part that actually matters for ITV's bottom line right now.
ITV guided for total advertising revenue to be "up around 10 percent in the second quarter," with a "strong July" driven by the men's soccer World Cup. That's not hypothetical. World Cup advertising on UK linear TV is one of the last genuinely premium inventory moments left in broadcast television—brands pay a serious premium because the audience is actually there, watching live, in real time.
The geopolitical caveat McCall included is standard CFO language, but it's not meaningless. Global advertising markets have been twitchy throughout 2025 and into 2026. Any escalation in trade tensions could dent the Q2 bounce ITV's counting on.
Still. A 10 percent TAR increase projected for Q2? Real momentum with a real event behind it.
Where ITV-Produced Content Lives (and Where It's Going)
If you're tracking down Rivals or Love Island globally, here's the current picture:
- Netflix: Select ITV Studios productions, including Rivals, available or incoming globally
- Disney+ Hotstar (India): ITV-produced content landing through the broader Disney+ deal pipeline; Rivals has premium placement
- Peacock: Love Island U.S. titles available; limited international reach outside North America
- BritBox India: Primary destination for ITV's classic and contemporary British drama catalogue
- ITVX: ITV's own streaming platform, growing streaming hours 13 percent year-on-year
Love Island specifically has built a cult following in India among younger urban viewers. Rivals has the kind of glossy period-drama appeal that travels well on premium tiers (honestly, the episode three dinner party scene alone is worth the subscription).
What Happens Next: The Timeline Nobody Knows
The Sky deal has no confirmed close date. "We will update the market in due course" is all ITV's saying publicly. Translation: weeks or quarters. Ofcom and the Competition and Markets Authority will scrutinize any formal announcement—combining Sky and ITV's M&E assets triggers serious regulatory attention in the UK.
Watch for ITV's H1 2026 results in late summer. That's the real test: can Studios deliver on its back-half delivery schedule cleanly? Scripted pipelines to Netflix and Disney+ need to hit their windows. That's what the full-year guidance rides on.
For the latest on where ITV-produced titles are streaming across regions, Movie OTT updates availability in real time—useful if you're trying to track down a specific show or just curious what's coming to your market.
The story here isn't just about whether Sky buys ITV's M&E division. It's about what happens to Studios independence, how ITVX scales globally, and whether the World Cup bounce carries through the back half. Watch the Q2 numbers. That's where you'll see if ITV's confidence is justified.
