NTL and ITV Reveal Merger Approach

10 November 2006

LONDON: The UK’s biggest cable provider, NTL, has flagged the possibility of a merger with commercial television giant ITV.

The highly tentative approach has been confirmed by both parties, but the pair have stressed that there is “no assurance that these discussions will lead to any offer being made for ITV”.

ITV is currently in a period of upheaval while it searches for a new ceo who will be tasked with reviving its failing fortunes as advertising revenues continue to slide at its flagship ITV1 channel.

The company was the object of takeover speculation earlier this year, but erstwhile ceo Charles Allen rejected a bid from a private equity consortium which wanted to replace him with former BBC director general Greg Dyke [WARC News: 04-Apr-06].

NTL, which is US-owned but operates exclusively in the UK, merged with nominal rival Telewest in March and bought cellphone operator Virgin Mobile in July.

A merger with ITV would give it access to the broadcaster’s treasure trove of programming that would provide valuable content to differentiate its services from rivals such as BSkyB, the satellite giant controlled by the News Corporation empire.

However, NTL’s current net debt of £5.9 billion ($11.29bn; €8.77bn) could be an obstacle to any deal with ITV. It also revealed this week a £1.9 million ($3.6m; €2.8m) slide in revenue from the second quarter, down to £642.8m.

Net loss almost doubled to £104.2m from £53.5m due to higher interest charges as a result of borrowings to finance the Telewest and Virgin acquisitions.

The company has announced it will rebrand as Virgin Media early next year, in hopes that the name will be a more attractive marketing tool to help erase memories of poor service in its earlier days.

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