[Article] ITV buys GMTV stake from SMG

DMC

I wonder what this means for UTV...... esp this bit... "ITV's digital channels, ITV2 and the ITV News channel, will now be promoted on SMG's two franchises - Scottish TV and Grampian TV - and SMG's advertising will be sold on new terms by the ITV sales house in London."

ITV buys GMTV stake from SMG

http://media.guardian.co.uk/itvunderpressure/story/0,1430,1213315,00.html

Chris Tryhorn
Monday May 10, 2004

ITV took control of GMTV today, buying out SMG's stake in a deal valuing the breakfast TV franchise at more than £120m.
It means ITV now has 75% of GMTV after SMG agreed to sell its 25% stake for £31m, with the remaining 25% stake owned by Disney.

The companies also announced they had settled a dispute over the use of the ITV brand name and reached an agreement giving ITV access to SMG's digital spectrum in Scotland.

ITV's digital channels, ITV2 and the ITV News channel, will now be promoted on SMG's two franchises - Scottish TV and Grampian TV - and SMG's advertising will be sold on new terms by the ITV sales house in London.

"This is another step in delivering our strategy to develop further the single ITV business," said the ITV chief executive, Charles Allen.

"ITV plc's acquisition of an increased stake in GMTV at a reasonable price will simplify the ownership structure and enable more agile decision making, which will benefit both ITV and GMTV as we work even more closely together."

After the ITV merger between Carlton and Granada was cleared, it emerged that SMG had lobbied regulators unsuccessfully to force the ITV companies to sell off their stakes in the breakfast network, which broadcasts on weekdays between 6am and 9.25am.

The SMG chief executive, Andrew Flanagan, said today it was in shareholders' interests to offload the GMTV stake, which last year accounted for £2.9m in pre-tax profits.

"The ITV merger created a 50% shareholder in GMTV and we don't want to have a minority interest in someone else's media business," he said.

"Our focus is on driving and capitalising on the operational performance of our wholly owned media assets as the advertising markets continue to improve."

The sale will nevertheless fuel questions about a potential break-up of SMG, which in January sold its holding in radio group SRH to Emap in a £90m deal.

Last year it also completed the disposal of the Glasgow-based Herald newspaper group for £216m.

Many analysts believe SMG's TV businesses will inevitably be swallowed up by ITV plc, which accounts for 92% of the network and all of ITV in England and Wales.

Mr Allen is likely to want to take over SMG's franchises, as well as the other ITV companies outside his grasp, Ulster TV and Channel TV.

SMG said it would use the proceeds of the GMTV sale to reduce its debt, which stands at around £150m.

It said it could no longer regard the stake - which it acquired as a 20% shareholding in 1991, before adding another 5% in 2000 - as "strategic".

The deal is subject to regulatory approval, and SMG's shareholders - including ITV itself, which has a 16.9% stake - will have their say too.

If it goes through, ITV will be obliged to make an offer at the same price for Disney's stake.

Under the separate agreement on airtime sales, SMG said its national TV advertising, which accounts for 85% of its advertising revenues, would be sold by ITV "on improved terms".

Local advertising would continue to be sold by SMG's own sales house in Scotland, the group said.

SMG said it had dropped its fight over ITV plc's use of the ITV name as a corporate identity.

"The ITV name has significant value to all ITV franchise-holders and is synonymous with high quality British television," Mr Flanagan said.

"I'm pleased that we have reached this agreement with ITV plc which clarifies the use of the ITV brand by Scottish TV, Grampian TV and ITV plc."