What BritBox sale means for ITV and BBC

ITV has sold its 50% stake in global streaming service BritBox International to joint venture partner BBC Studios for £255m.

The commercial broadcaster intends to return the net proceeds from the sale (around £235m) to shareholders through a share buyback after its full-year financial results next week.

Analysts who spoke to The Media Leader noted that the share buyback plan “adds a real boost” to overall share price. In the afternoon following the announcement, ITV’s share price was up 15.32%.

Under the agreement, ITV Studios will continue to receive an ongoing revenue stream from the service through new extended licensing deals.

The Media Leader understands that the international service has no current plans to launch an advertising tier.

Dame Carolyn McCall, ITV’s CEO, said in a statement that the sale allows the broadcaster to be “focused on its core strategic goals” of growing ITVX and ITV Studios.

Tom Fussell, BBC Studios’ CEO, called the deal “an important acquisition” that gives the BBC full ownership of “a successful, growing service we know well and that fits with our stated ambition to double the size of our business”.

He added that it would “continue to make significant investments” in BritBox.

Analysis: Different priorities

Analysts who spoke to The Media Leader believe the move comes down to differing international and domestic priorities.

Richard Cooper, research director at Ampere Analysis, said ITV’s sale of the stake was “not entirely a surprise”.

He explained: “When you’ve got joint ventures like this, with two partners who have got quite different strategic aims and are possibly at loggerheads with one another around some of the strategic direction that you want to take, it really boils down to decision-making processes.”

For ITV, according to Cooper, this deal increases its ability to do licensing deals internationally with “major players who are still pretty hungry to acquire film and TV rights”, especially for the broadcaster’s TV formats that do “particularly well” on streaming services.

The BBC, as “the stronger brand” internationally, is now “freed up” from having to make joint decisions and can develop “a truly international streaming service” similar to other major studios.

Christian Knaebel, managing director of Global Media Consult, shared Cooper’s vision.

“BBC Studios is able to focus on this vehicle for international growth. They have the resources and knowledge of international markets in regard to what resonates in these markets with the audience,” he told The Media Leader. “They probably offer different ‘flavours’ of BritBox to different local markets based on that knowledge.

“On the other side, ITV is now able to focus on ITVX in its home market and does not need to bother with international markets. What it also shows is that BBC Studios is a strong believer in that local content can travel and finds an audience internationally.”

Cooper concluded: “BritBox going forward is going to be able to make some of those critical decisions about how it extends its international reach and how its content is going to be made available and how that is going to be monetised as well.”

High valuation

Tim Westcott, content research lead at Omdia, estimated that it was BBC Studios’ “biggest acquisition” and this could mean it will come under “some sort of political pressure” to justify that spend, particularly at a time when the BBC is having to cut back in the UK.

Independent analyst Ben Keen said: “ITV can also be pleased with the £500m valuation of BritBox International, which translates to about £133 per subscriber — almost double the annual revenue per subscriber.

“That said, BBC Studios now needs to use its new position of control to ramp up subscription growth as 3.75m subscribers is definitely sub-scale for a streamer with global ambitions.”

Westcott echoed this, adding: “Compared to the global streamers, BritBox is very small. It does have the strength of having the BBC archive, it does have a small amount of original content; but compared to the likes of Netflix and Amazon and Disney, the BBC has a very small amount of money, which it can risk on what you might call the kind of content that drives SVOD [subscription VOD] platforms, which is mostly scripted drama.

“However much the BBC expands internationally, that’s not its core business. Its core reason for existence is serving licence payers in the UK. So BritBox is a part of its marginal activity to increase its commercial revenue.”

What next?

Keen said: “Just as it made sense for the BBC to sell out of BritBox UK in order to focus solely on iPlayer, so it makes sense for ITV to exit from the international service to double down on ITVX and Planet V.”

This point was also raised by Matthew Bailey, principal analyst, media and entertainment, at Omdia, who highlighted ITV’s “aggressive digital targets” for advertising revenue as a factor for its decision.

He explained: “What is clear is that if they are going to reach those aggressive targets, it’s going to come from VOD, it’s going to come from digital video advertising — not the export side of things.

“So I think what we’ll see is ITV really doubling down on what it’s doing in that transition of TV into the digital world of advertising.”

Meanwhile, Knaebel predicted: “What I believe comes next is how BBC can expand BritBox in more than just a streaming services and add more like community feature and make it the core of a ‘Brit super app’.”

Showcasing British entertainment

ITV and BBC Studios founded BritBox in 2017 to showcase British entertainment, including original shows, co-productions and other popular scripted and live programming, to international audiences.

The international SVOD service is currently available in eight countries: Australia, Canada, Denmark, Finland, Norway, South Africa, Sweden and the US.

BritBox UK is unaffected by the latest news and has separate long-term agreements. It is now fully owned by ITV and became part of ITVX’s premium tier in 2022.

In February, it was announced that the UK standalone app will shut down in April, with content moving to ITVX.