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ITV is continuing discussions with Sky regarding a potential £1.6 billion acquisition of its broadcasting division, the British broadcaster has confirmed, even as it reported a dip in annual profits.

The UK television giant initially confirmed these talks in November but reiterated on Thursday that there remains “no certainty” that a deal will ultimately materialise.

This update coincided with ITV revealing a 5 per cent decline in adjusted pre-tax profits, falling to £448 million for the year ending 31 December, compared to the previous year.

Despite the drop, the company, responsible for popular programmes such as The Masked Singer and I’m A Celebrity… Get Me Out Of Here!, described its performance as “stronger than expected” given a “challenging market backdrop.”

Late last year, ITV had cautioned that advertising revenues were negatively impacted by uncertainty surrounding the November budget.

In its fresh update, ITV told shareholders that revenues were broadly flat at £4.1 billion for the year, with a 5 per cent dip in its broadcast arm offset by a 5 per cent rise in its ITV Studios production business.

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Chief executive Carolyn McCall told reporters the business had been boosted by strong growth from its ITVX streaming business, which it said had outperformed some rivals.

“Our viewers clearly value what we have been doing digitally – ITVX is growing a lot,” she said.

“We are way ahead of where our plan was on digital advertising.

“Some of the streaming services are plateauing but the streaming services run by broadcasters are growing well.”

The company was also continuing with efforts to reduce costs in order to support its finances.

It said it expected £20 million more in non-content cost savings this year as a result.

Ms McCall said: “Our results demonstrate the scale of our transformation as we continue to successfully execute our More Than TV strategy.

“As part of the strategy, in 2022 we set intentionally ambitious targets and have been adapting as necessary in a rapidly evolving media and entertainment market.

“These targets are helping us transform ITV – creating a much more entrepreneurial, ambitious culture.”