ITV in Sky Talks, Reports 2025 Studios Profit Drop, Ad Revenue Fall

U.K. TV giant ITV on Thursday reported slightly lower earnings for its ITV Studios production unit, due to a previously highlighted change in revenue mix, and a less pronounced than expected 5 percent advertising revenue decline for the full year 2025, compared with 2024.

The company had estimated late last year that its full-year 2025 ad revenue would be down 6 percent, with a 9 percent decrease in the fourth quarter as the “economic outlook in the U.K. remains uncertain, with widespread caution being exercised across business sectors ahead of the budget in November.”

On Thursday, ITV, led by CEO Carolyn McCall, said its total external revenue in the latest full year rose 1 percent, with total revenue unchanged, while adjusted EBITA dropped 1 percent amid “tight cost management.”

ITV has been in deal talks with Comcast’s Sky. The company said in November that it was in discussions to sell its media and entertainment unit to Sky for £1.6 billion. ITV’s financial update on Thursday mentioned Sky this way: “Following our announcement in November 2025, we remain in discussions with Sky regarding a possible sale of the M&E business. There can be no certainty as to whether a transaction will take place and an update will be made in due course.”

ITV Studios has over the past 36 hours become a renewed focus of deal chatter following a mega-merger between production giants Banijay and All3Media, owned by a joint investment partnership between Gerry Cardinale’s RedBird and IMI Media, led by RedBird operating partner and RedBird IMI CEO Jeff Zucker. RedBird IMI had acquired All3Media in 2024 for $1.45 billion.

During a Wednesday conference call, François Riahi, the CEO of Banijay Group, the parent company of Banijay, was asked about the merged entity’s possible interest in ITV Studios. “Consolidation is the name of the game,” he said, adding that the company would keep all options open. “When you look at the Warner-Paramount deal, it’s very easy to understand why you need to be big and global to be relevant in this sector. So we share this view with RedBird IMI.”

In response to a reduction in advertising demand, ITV said in November that it had identified £35 million of additional temporary savings in its Media & Entertainment (M&E) segment in the fourth quarter. “These savings align our M&E cost base — particularly content and discretionary spend — with the softer advertising demand we are seeing in the fourth quarter and will largely offset the expected reduction in total advertising revenue,” it highlighted.

The targeted cuts included 20 million pounds ($26 million) in content savings, “as we move some programming into 2026, which will be financed out of the existing 2026 content spending plans,” ITV said.

McCall lauded ITV’s “good performance in 2025, ahead of current market expectations and against a challenging market backdrop.” She added: “With a strong digital platform, we have successfully capitalized on growth opportunities, delivered resilient profits and generated good levels of cash. Our results demonstrate the scale of our transformation as we continue to successfully execute our More Than TV strategy.”

The ITV CEO also highlighted that “we have achieved a key strategic goal with two-thirds of our revenues now coming from ITV Studios and our digital M&E business.” Looking ahead, McCall said: “We are focused on delivering continued strategic progress, driving profitable growth and strong cash generation, underpinned by our unwavering value creation strategy.”

As part of ITV’s continuing cost-saving program, management is targeting a further £20 million ($27 million) “permanent non-content cost savings in 2026 as we continue to create a leaner business.” It added: “We expect our total content spend to be around £1.225 billion ($1.640 billion) in 2026, as we continue to optimize our content spend to best reflect viewer dynamics.”

First-quarter advertising revenue is forecast to be down around 2 percent. “As is normal, advertisers are holding back budgets in order to spend in the second and third quarters around the expanded Men’s [soccer] World Cup,” ITV said. “We are showing 19 more matches than in 2022, and with more matches at peak time. We are confident that the [Cup] will deliver a strong advertising performance.”

Asked about the volatile political situation in the Middle East’s effect on advertisers’ behavior, McCall said ITV has seen “no impact.”