UK Production Spend Drops £2bn as ITV Slashes Budget and Legacy Broadcasters Retreat From Content

UK film and high-end TV spending fell 40% YoY to £5.2bn. ITV cuts £30m from programming as ad revenues slide and the Sky sale awaits regulatory scrutiny. Legacy broadcasters are in managed decline.

UK spending on film and prestige television production has plunged £2.08bn year on year, falling 40% to £5.2bn in the year to September 2026. The figure, from the British Film Institute, marks a brutal correction after a record 2025 inflated by blockbusters including Avengers: Doomsday and the first Harry Potter TV series. The BFI cautioned that initial figures are typically revised upward — 2025 was eventually raised by £900m — but even with generous revisions, the trajectory is grim.

ITV has responded by announcing £30m in "temporary" savings: £25m stripped from content budgets and £5m from other operations. The cuts will primarily defer small external commissions into 2027, meaning independent production companies absorb the pain first. CEO Carolyn McCall blamed macroeconomic uncertainty, the rise of digital advertising on global streaming platforms, and new 9pm watershed rules on junk food advertising. ITV expects ad revenue to drop 5-10% in Q4 and 2-3% for the full year. The deeper structural story is consolidation under duress. ITV has agreed to sell its TV and streaming business to Comcast-owned Sky for £1.6bn, a deal McCall frames as survival. But Culture Secretary Lisa Nandy issued a public interest intervention notice last week, flagging that a merged Sky-ITV would control roughly 86% of linear news and current affairs viewing in Britain, plus raising concerns about US political influence on editorial independence. The deal is still expected to close in H2 2027. ITV is not alone in retreat. The BBC plans to cut up to 2,000 jobs. Channel 4 is planning layoffs. ITV says its own savings won't involve staff cuts — for now. The common thread is that traditional ad-funded and licence-fee broadcasters are being outspent and outcompeted by Netflix, YouTube, and Amazon, which operate on global scale economics that domestic players cannot match. The BFI's language is diplomatically vague — citing "significant shifts in the global industrial context" and "increased competitiveness from other international territories." Translated: Hollywood studios and streamers are spending elsewhere. The UK's generous tax credits once made it a production magnet; now other countries have matched or exceeded those incentives, and the strong 2025 comparator makes 2026 look worse than the structural trend alone would suggest. ITV's studios division — which will be the rump business after the Sky sale — posted revenue down just 1% through nine months, and produced five of the UK's top 10 most-watched dramas in Q3, including The Gentlemen for Netflix and The Blame for ITV. This is the quiet tell: the production arm survives by serving the same streamers that are hollowing out the broadcaster. ITV's future is as a supplier to the platforms that replaced it. Shares dropped nearly 4% on the day and are down roughly 20% year-to-date. The market is pricing in what the numbers confirm: legacy UK broadcasting is a shrinking asset, and the only question is how the remaining value gets divided between global platforms, regulators, and the workforce that built British television.