ITV Rejects NTL Offer, Closes Door On Any Sweeteners

22 November 2006

LONDON: Whether BSkyB's shock acquisition of a 17.9% stake in ITV last Friday was the catalyst that caused its board to reject NTL's cash and paper £1.22 per share takeover offer yesterday is not known. But insiders, including NTL's largest shareholder Sir Richard Branson , are convinced that the deal-killer was Clan Murdoch's strategic snatch.

In a statement issued Tuesday, ITV declared that it saw "little, if any, strategic logic" in merging with NTL - a statement that is probably intended to deter the debt-laden US-owned cable operator from sweetening its offer.

As he watched hundreds of millions of pound notes fluttering away from his fingertips, Branson's usual rictus was conspicuous by its absence. He accused ITV's board of "closing the door on NTL without even seeking to discuss the strategic merits of a combination."

The tirade continued. "A week ago [ITV] saw the obvious benefits of Virgin Media [the name under which NTL will shortly rebrand] and ITV coming together. What has changed is that Murdoch has bought 18%."

Branson called on UK politicians to "stand up to" Murdoch [whose family controls BSkyB and News Corporation], arguing that his investment in ITV "has already had a material influence on the company and damaged the plurality of the British media".

That call was echoed by former film producer Lord David Puttnam, now a New Labour peer, who was instrumental in amending the 2002 Communications Acts to ensure that UK media bids are required to pass a 'public interest' test. BSkyB's stake in ITV, he said, "blows competition in the media completely out of the water".

But in calling on the government to intervene, the knight and the lord are displaying uncharacteristic naiveté. The Blair administration's survival depends on the continuing support of Murdoch's massive UK media presence.

ITV's board, meantime, insists it rejected NTL's £1.22 per share offer on grounds that it "materially under-valued ITV". It pointed out that ITV had already rejected a private equity bid of £1.30 - and that BSkyB paid £1.35 for its controversial stake.

Data sourced from Financial Times Online; additional content by WARC staff