UK network ITV has confirmed it is in talks with Comcast over a shock £1.6B ($2.1B) sale of its Media & Entertainment business.

News of the potential deal emerged out of the blue overnight, with Comcast hoping to add the main ITV network, its suite of linear channels and the ITVX streaming business to its roster. Comcast bought UK pay-TV giant Sky in 2018 for around £30B.

In a statement to the stock exchange this morning, ITV said it “notes the recent press speculation and confirms that it is in preliminary discussions regarding a possible sale of its M&E business to Sky for an enterprise value of £1.6B.  

“There can be no certainty as to the terms upon which any potential sale may be agreed or whether any transaction will take place. A further announcement will be made in due course if appropriate.”

A deal would form a hugely powerful UK broadcasting business, as Comcast already owns Sky and a suite of production companies, such as Day of the Jackal maker Carnival through NBCUniversal. Notably, the statement points to Sky as the buyer, not its parent.

We understand Comcast isn’t the only major U.S. studio to have explored a deal for ITV’s broadcasting arm, which yesterday warned it was seeking to make additional cost savings of £35M at the M&E business amid a “softening” British economy. The TV advertising downturn has hurt all of Europe’s major commercial broadcasters and most have looked to new revenue streams to hold up their value.

ITV’s production and sales wing, ITV Studios, which makes and sells the likes of Love Island and Line of Duty around the world, has been the subject of its own takeover talk, with the likes of All3Media parent RedBird IMI and Banijay among those known to have kicked the tyres.

It has therefore come as a surprise that it is in fact the channels business that appears closer to sale. ITV rival Channel 5 is already owned by a U.S. behemoth, Paramount-Skydance, although rumors over a sale of Channel 5 in the Skydance regime abound. Its other rival, Channel 4, has a completely different ownership structure.

Revenue in the networks biz fell by 5% to £1.44B over the first nine months of this year, according to yesterday’s trading update.

Any deal would need to worm its way through the competition regulator. Media analyst Ian Whittaker told the BBC that a combination of Sky and ITV would mean the pair had “70% plus” of the UK TV advertising market, which he said “in normal circumstances” would be rejected by regulators because of the dominance it would give them. But Peter Bazalgette, a former ITV chairman, called on regulators to be flexible given that ITV is now taking on the likes of Google and Meta in the video advertising space.

ITV’s notoriously sticky share price shot up by 18% to 80p per share this morning, its highest figure for several weeks. This had been steadily declining since September. The network’s share price has been the subject of constant discussion over the years and any sale would unlock some value for disgruntled shareholders.

Max Goldbart contributed to this report