(Adds detail, background, analyst comments)
LONDON, May 7 (Reuters) - ITV, Britain's biggest commercial free-to-air broadcaster, has agreed to pay up to $800 million for U.S. reality television show producer Leftfield Entertainment, its biggest acquisition to date.
The purchase of Leftfield Entertainment, the producers of The Real Housewives of New Jersey and Pawn Stars, adds to ITV's efforts to strengthen its portfolio to combat increased competition from rivals such as Sky and online streaming services.
ITV said the deal, which has already won regulatory approval, would make ITV Studios U.S. the largest unscripted independent producer in the United States. It will be earnings enhancing from day one.
The British broadcaster said in February that it was on the hunt for acquisitions in the U.S. and Britain after it posted an increase in revenue and issued a special dividend for shareholders.
The company saw a 20 percent rise in revenue in 2013 to 857 million pounds following the acquisition of four production companies.
ITV will make an initial cash payment of $360 million for 80 percent controlling stake of Leftfield Entertainment, with the total fee rising to $800 million for the whole of the company after three to five years if the studio's earnings reach at least $130 million a year.
Leftfield delivered earnings of around $38 million in 2013, and is expected to maintain its strong growth this year.
Shares in ITV were up 2.1 percent at 188 pence by 1057 GMT, making it one of the highest risers on the FTSE 100 index.
"We see the acquisition as a big strategic positive," said Liberum analysts in a note.
"It makes ITV an even more serious player in the U.S. reality entertainment market ... the margins are very good - so this should help ITV's global content business in other markets," they added.
(Reporting by Kate Holton and Li-mei Hoang, editing by Louise Heavens)