ITV is a national treasure – why is it being sold for peanuts?

For those of us of a certain age, ITV was the one channel you wanted to watch even if your aspirational parents sniffed at it, says James Moore. Let’s hope that whoever buys it shows it as much love as we do

How do you value an asset like ITV? There’s the business, obviously. But the commercial broadcaster, the UK’s first, is also a cultural institution that still matters. And now that it has a for sale sign outside its HQ, it is also a huge political headache.

In terms of pounds, shillings and pence, the broadcaster is worth £1.6bn – that’s what Sky, which is owned by the American media giant Comcast, is proposing to pay for it, partly with cash or shares, partly by taking on some of the debt.

What it will get is the broadcaster, so the main ITV channel and its smaller siblings, as well as its streaming business ITVX. Remaining behind will be ITV Studios, which produces programming both for ITV (Coronation Street, I’m a Celebrity, Love Island and so on) and others – domestic (Ludwig for the BBC would be an example) and global (eg Rivals, for Disney).

The business logic behind this is that it is hoped ITV Studios will look like a brighter, shinier object for investors if they are focused on its output and earnings rather than constantly fretting about the volatile and downbeat market for TV advertising.

‘In a time of cultural atomisation, ITV still has the capacity to persuade millions of people to watch at the same time’ (PA Wire)

The broadcaster warning of a “soft” fourth quarter, with ad revenues down and £35m of cost cuts planned, drew most of the attention when the company issued its latest results, despite the handy 11 per cent rise in sales posted by ITV Studios. This has long been the way of things, to the frustration of the latter’s bosses.

Nationally, however, ITV, which can still deliver a rare mass audience, has a much higher value than the proposed purchase price. While £1.6bn sounds like a lot, it’s pocket change in a media landscape dominated by giant conglomerates.

Despite its recent woes, ITV remains the people’s channel. For those of us of a certain age, it was the one you wanted to watch even if your aspirational parents sniffed at it. Gen X-ers will remember that while the BBC produced the wholesome Swap Shop on a Saturday morning, ITV countered with the anarchic Tiswas. Which was so much more fun.

Even today, in a time of cultural atomisation, it still has the capacity to persuade millions of people to watch at the same time. The Guardian once infamously gave Love Island zero stars (one of 18 such reviews it has handed out). The joke was on the paper and its critic. People watched in their droves, up to and including former chancellor George Osborne.

This is also a channel that still has an enormous and lasting impact. It has real clout. Remember Mr Bates vs the Post Office? The drama, starring Toby Jones, was a smash hit that had people shouting angrily at their screens, including your correspondent – and moved the dial in the direction of justice.

Yes it was produced by ITV Studios, but it was commissioned and sent into people’s homes by ITV the broadcaster.

But wait, Comcast would say, this is about buffing up that business. We love it. We value it, and combined with Sky, we can create a UK-based streaming titan, capable of going head-to-head with the likes of Netflix, Disney and Amazon. British consumers will benefit from that. So will the nation’s vibrant creative sector. Don’t underestimate the latter.

That will be the pitch to the public, and to a government which will likely look at the proposals with a wary eye.

Sky-ITV combined will, for starters, control 70 per cent of the TV advertising market. How relevant that figure is when media buyers purchase across traditional broadcasters, streaming, and social media at the same time, is open to debate.

It is something Ofcom and the Competition and Markets Authority will be asked to consider. They will also want to hear about Sky’s plans for ITN – the 40 per cent stake ITV has in that business will move to Sky as part of the deal. ITN recently signed a new five-year deal to supply ITV with content. Needless to say, Sky already has its own (loss-making) news business.

Politicians put a very high value on that part of the business, even if executives do not, for obvious reasons. So while this might be a relatively small deal, it is a huge political issue and will remain so while the regulatory process plays out.

Comcast’s executives are playing poker here. Behind the scenes – and maybe in public at some point – they will be asking those politicians if they really are as pro-business and pro-growth as they claim to be – with the warning that they might just walk if they don’t like the answers they’re getting. Whatever happens, it is vital that we keep this national treasure alive.