ITV, Britain’s biggest free-to-air commercial broadcaster, has agreed to buy the TV business of Northern Irish network partner UTV for £100 million in cash.
The deal includes the new Irish channel, UTV Ireland, which has made substantial losses so far this year.
“Having successfully extended the reach of our television business with the launch of UTV Ireland, I believe that shareholder value can be maximised through our television interests becoming part of ITV’s global broadcast and content business,” Richard Huntingford, the UTV chairman, said yesterday.
UTV Ireland, which was launched at the start of the year, is expected to make an £11.5 million loss for the year as advertising revenue has come in well below forecast on the back of disappointing viewership figures.
The deal will put 13 of 15 so-called channel 3 licences in the hands of ITV, and the company said that the combined business would benefit from ITV’s investment in content, its advertising sales team and broadcast infrastructure.
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UTV will retain its radio businesses UTV Radio GB and UTV Radio Ireland, and its digital media businesses, Simply Zesty and Tibus Digital, ITV said.
Shares in UTV rose 4.6 per cent to a five-month high of 181.5p after the announcement, which has been widely anticipated since UTV said it was in talks in August.
Shares in ITV, which boasts a roster of shows including Coronation Street and Downton Abbey, were down 0.5 per cent at 247.6p in a flat market.
Analysts at Citi said ITV was paying above the average transaction multiples for a broadcast business for UTV, which made a loss of £3.3 million in the first half.
They said cost synergies, however, would make the deal broadly neutral for ITV’s earnings per share in the first year.
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After the deal, only the two channel 3 licences in Scotland owned by STV will remain outside ITV’s control.
Analysts at Liberum said they did not think a final deal to unify the network was likely. “We do not think ITV will make a bid for STV due to the political sensitivities of Scotland’s main commercial broadcaster being owned by London-based ITV Plc,” they said