Shares in British broadcaster ITV fell sharply this week as investors shifted their focus from the strategic merits of selling its traditional broadcasting business to the financial and operational costs associated with the transaction.

After initially rising 1.2% when the deal was announced on Monday, ITV shares reversed course and were down around 10% by Thursday, reflecting investor concerns over the lower-than-expected sale price, substantial separation expenses, ongoing overhead costs and the lengthy regulatory approval process.

The company has agreed to sell its broadcasting business to Sky, which is owned by Comcast, in a transaction worth up to £1.6 billion.

Under the agreement, ITV will receive £1.2 billion in cash, an additional £200 million through the contribution of Love Productions, and a further £200 million that depends on ITV’s advertising revenue performance in 2027.

While investors broadly welcomed ITV’s decision to exit its traditional broadcasting operations, analysts said the structure of the deal leaves high costs that could weigh on earnings in the near term.

Daniel Kerven, an analyst at JPMorgan, downgraded the stock and lowered his price target after reviewing the transaction.

“ITV has not been able to secure the deal that we had hoped for,” he said.

Explaining the downgrade, Kerven said it reflected: “the lower disposal price, separation costs and stranded Studios costs.”

Analysts estimate that ITV will incur approximately £150 million in one-off separation costs as it disentangles the broadcasting business from the rest of the group.

In addition, roughly £200 million of so-called “stranded costs” are expected to remain. These are corporate overheads, shared services, and operational expenses that supported the broadcast business but cannot immediately be eliminated after the sale. Unless ITV successfully restructures its remaining operations, those costs could continue to weigh on profitability.

The market reaction suggests investors are more concerned about the execution of the transaction than its strategic rationale.

Many analysts have argued that ITV’s broadcasting business faces long-term structural challenges as audiences increasingly migrate from traditional television to streaming platforms and digital media. That shift has placed sustained pressure on advertising revenues and viewing figures across the broadcast industry.

A top-30 ITV shareholder told Reuters that investors were disappointed by the size of the separation costs and the lengthy timetable for completing the transaction, but remained supportive of the decision to dispose of the broadcasting unit.

The investor described the business being sold as a “melting ice cube.”

The phrase reflects a view commonly used by investors to describe businesses that continue generating cash but are in long-term structural decline because of changing consumer behavior and technological disruption.

The transaction is also expected to face an extensive review by competition authorities.

ITV said it anticipates the deal will take between 12 and 18 months to complete, meaning the company may not receive the full strategic benefits of the sale until well into 2027.

The acquisition is likely to be scrutinized by UK competition regulators because it combines two significant players in Britain’s television and media landscape, raising potential questions about market concentration, advertising competition, and consumer choice.

One notable feature of the transaction is that it will not require shareholder approval, even though its value represents approximately 58% of ITV’s market capitalization. That is because changes to the UK’s listing rules introduced in 2024 removed the requirement for shareholder votes on most significant corporate transactions, except for reverse takeovers and new listings.

The reforms were designed to make London’s capital markets more competitive with New York and European exchanges by allowing companies to execute major strategic transactions more quickly.

ITV’s agreement is among the largest transactions to take advantage of those revised rules, following Vodafone Group’s sale of its Italian operations to Swisscom in 2024 without a shareholder vote.

Although the sharp decline in ITV’s share price suggests investors are disappointed by the economics of the transaction, market sentiment indicates there remains broad support for the company’s decision to exit a structurally declining broadcasting business.

The immediate concern is whether the costs of separating the business, the remaining overhead burden, and the prolonged regulatory review will offset much of the value created by the £1.6 billion sale in the short term.