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Media speculates over ITV acqusition of STV and UTV after Channel TV deal

By Hamish Mackay

October 19, 2011 | 3 min read

Media speculation grows that ITV could

be poised to buyout both STV and UTV

Media industry observers are increasingly speculating that ITV, with cash reserves of around £800 million, could be poised to launch a buyout bid for STV and UTV.

The speculation comes in the wake of this week’s decision by ITV, to buy up Channel TV.

The Guardian had reported that : “ITV plc's move to snap up Channel Television has sparked a flurry of speculation that the broadcaster might also be sizing up a £300m-plus buyout of STV and UTV - completing the near 20-year process of consolidating the network under a single owner.”

He points out: “Before ITV consolidation began in the early 1990s, the network was made up of 15 independent regional companies and breakfast licence-holder GMTV. After the Channel TV deal, only ITV plc, STV and UTV remain.

“Buying STV and UTV, which hold the licences to broadcast ITV1 in Scotland (Scottish TV and Grampian) and Northern Ireland respectively, would give ITV plc control of the entire channel 3 networks across the UK.”

Sweney recalls that in 2006 UTV Media and STV held ultimately unsuccessful merger talks, and in November 2009 ITV plc took full control of the GMTV breakfast licence, buying out minority shareholder Disney.

The Guardian quotes Ian Whittaker, an analyst at Liberum Capital as saying: "The acquisition of Channel Television is not that significant in itself but there would be significant strategic logic from acquiring the other two groups.

"It would simplify the ITV structure into one firm … and there would (presumably) be synergies on the revenues and cost side from a more efficient ITV structure."

STV has a market capitalisation of £38m and a forecast of £51m net debt at the end of the year, while UTV Media, which also owns radio stations including TalkSport as well as London free magazine Sport, has a market capitalisation of £116m and a forecast of net debt of £58m by the end of the year.

"Financially, ITV would have no problem acquiring either business," said Whittaker. "Assuming there is nothing nasty hidden away in either company's pensions."

In April STV reached an £18m settlement with ITV to end a long-running series of legal disputes.

Last year Ofcom ruled that ITV was paying a disproportionate amount – as much as £15m a year – of the overall costs of running the national TV network.

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