HTV outbid by rivals for Westcountry

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The Independent Online
HTV has been outbid in the surprisingly robust preliminary auction for Westcountry, the ITV licence holder for the South-west of England.

According to sources, four other companies have also put in offers, at least two of which are not ITV companies. All of these are believed to be significantly higher than the HTV bid.

Among the likely newcomers to the market is CanWest, the Canadian broadcaster which failed earlier this year to win the controversial bidding for the Channel 5 licence.

CanWest has said it was eager to invest in the commercial television sector in the UK, and its executives travelled to London last month to hold a series of exploratory talks with a range of broadcasters.

It is also believed that Daily Mail & General Trust, publishers of the Daily Mail, may have put in a bid for Westcountry, despite already holding 17 per cent of the company's shares. It is thought the company is attempting to determine a fair price for the licence holder, as a prelude to either buying out its partners - Brittany Ferries and South West Water - or selling its stake.

The auction is being handled by Lazard Freres, the merchant bank, which yesterday declined to comment on the sale. It is understood, however, that Lazard believes the HTV bid, which could be under pounds 40m, is far too low, and that the company will have to reconsider its offer if it is to prevail.

Westcountry's owners had hoped for a valuation of about pounds 70m. But HTV is believed to have determined that the company's future earnings will be hit by the phasing out of the Channel 4 levy and the small companies' subsidy paid by other ITV companies. As a consequence, it believes that as much as pounds 8-10m a year in profits will be wiped out, roughly equivalent to the pounds 8m Westcountry is forecast to make this year.

The Westcountry deal is a "sideshow" to the real action, said one of the auction participants. It is expected that HTV itself will become a bid target, whether or not it buys Westcountry. The market believes that both Carlton and United New & Media, which are believed to have put in their own bids for Westcountry, are both stalking HTV.

Talks between Lazard and advisers to the bidders are expected to resume next week, and sources close to the process caution that it is far too early to predict an outcome.