What the CMA should actually be asking about Sky and ITV
Opinion
The Sky-ITV merger review isn’t really a competition question. It’s a test of whether Britain’s regulator can build conditions that work, after getting it badly wrong from 2009 to now, writes Omar Oakes.
In recent years we’ve seen a parade of Americans standing up here at the MacTaggart telling us how things ought to be done. But how do you explain the number of US entities queuing up to buy our producers and now, our broadcasters? Doesn’t this suggest that, maybe, as with our gun laws and health system, it’s us who are showing them how it ought to be done?”
That was Channel 4’s then chief executive David Abraham, using his 2014 MacTaggart lecture to warn that ITV might end up American-owned, with John Malone’s Liberty Global then circling.
Twelve years later, it’s happening – Comcast is the buyer, having bought Sky outright in 2018. Channel 5 never left the position Abraham described; it’s simply traded a Viacom logo for a Paramount one.
I doubt even Abraham guessed how right he’d be. What looked unthinkable in 2014 now strikes much of the industry as common sense. Who would disagree with what Dana Strong, CEO of Sky, said earlier this month? “We believe that the world has really changed, and that the definition of a TV ad market from a linear standpoint is quite antiquated.”
Yes, combining Sky Media and ITV Media would create a dominant linear TV sales house (north of 70% of the market, leaving Channel 4 a distant second), but that no longer matters in a “total TV” world of streaming and video-sharing.
Except this merger is too important, and too consequential, to be left to a UK competition regulator working from that framing alone.
This deal’s implications reach far beyond the inventory choices advertisers will have once the deal completes.
An American, an American, and two that report to Whitehall
If Sky-ITV completes on schedule, British broadcasting becomes a carve-up between two American-owned companies, Comcast and Paramount, and two that answer, however independently, to the UK Government.
In the likely event that the deal completes in a year’s time, that moment marks the point at which the entire commercial architecture of British TV stops having a British-run counterweight anywhere inside it.
What actually changes isn’t day-to-day programming. But it changes who’s in the room when the decisions that matter get made: investment horizons set against a global parent’s quarterly reporting cycle, commissioning risk weighed against a balance sheet with priorities in a dozen other markets, and public service obligations that a domestic owner treats as identity and a global one treats, eventually, as a cost line.
None of that requires bad faith. It’s just what happens when the entity making the call has never had to sit in a British newsroom, a British boardroom, or before a British select committee to explain itself.
Worse than a worse rate card
The obvious fear is that a big Sky-ITV sales house simply charges independent agencies more than it charges the big five holding companies.
But the real risk is worse than that.
In the extreme case, a single dominant seller doesn’t need to discriminate by agency size at all. It can post one rate card and let everyone pay it. Volume discounting has only ever worked as a threat (walk away and take your business elsewhere), and once Sky-ITV effectively is the market, that threat weakens for everyone, holding companies included.
And the rate card was never really ‘the price’. What has really earned big agency investment, for decades, are the off-card volume tiers holding companies built. Because it rewards guaranteed commitment.
A bigger, more American seller doesn’t dismantle that machinery; in fact, it has more reason to keep it running, because a guaranteed volume commitment from Omnicom or WPP is worth more to a single dominant seller than the same money arriving in a dozen smaller, less predictable bookings from independents.
But for the indies, the real risk is losing access to the table where the real number gets negotiated at all.
A table already built for five global holding companies, soon sitting across from three American-owned broadcasters, discussing terms no independent agency has the volume to influence.
Britain has already run this experiment, and failed it
Two days after the Sky-ITV deal was announced, the BBC’s newish director-general Matt Brittin revealed the corporation was in talks with Channel 4 to build a single British “sovereign platform” to compete with the US-owned streamers. ITVX will presumably count as one of them.
It’s a cold reminder of how badly the CMA’s predecessor has already botched this exact call. In 2009, the Competition Commission blocked Project Kangaroo – a joint venture between the BBC, ITV and Channel 4 to build a British video-on-demand platform – on the grounds that allowing three “close competitors” to combine would harm a developing market.
Funny how nobody applied the same test three years later when Netflix arrived in the UK, followed by Amazon Prime Video, Disney+, Apple TV+, Paramount+… or when YouTube began insisting it was “TV” too last year.
Far from protecting advertisers and viewers from monopoly pricing, blocking Kangaroo helped hand American streamers the terms on which Britain now watches TV online.
It was the moment British broadcasting was denied the chance to build scale on its own terms, at exactly the point scale started to matter, while foreign platforms were left to build theirs entirely unscrutinised. Seventeen years of that asymmetry is a meaningful part of why ITV is selling itself from a position of weakness rather than strength.
Protect the industry of tomorrow
Which is why the question before the CMA was never really “should this merger happen.” Blocking it repeats 2009; protecting a domestic market that barely exists any more from a threat that has already lost the war to everyone else.
And waving it through with no conditions repeats the Netflix mistake, just with the passport reversed, on the theory that “British champion” is self-explanatory and therefore self-enforcing.
Warner Bros. Discovery already ran that experiment for real: promising scale to fight the streamers, only to deliver thousands of job losses and a company that split itself apart within a few years of forming. Nobody who watched that happen should accept the same pitch twice without asking what’s actually being built.
As for Americans being invited to the UK to tell us how to run things: who’s giving this year’s MacTaggart lecture during next month’s Edinburgh TV Festival? Step forward Pedro Pina, VP head of YouTube EMEA: the first American tech representative since Eric Schmidt to deliver it.
I suspect he won’t be the last.
Omar Oakes was the founding editor of The Media Leader and continues to write a column as a freelance journalist and communications consultant for advertising and media companies. He has reported on advertising and media for 10 years.