HTV's bid for Westcountry falls well short of pounds 70m

Click to follow
The Independent Online
HTV has tabled a bid for Westcountry, the ITV licence holder for the South-west of England.

It is understood that at least one other ITV company, possibly two, has also expressed interest in the company. Carlton or United News & Media are the most likely candidates.

HTV, which yesterday unveiled interim profits of pounds 6.7m, up 10 per cent, is believed to have bid far less than the pounds 70m hoped for by Westcountry's bankers, Lazard Freres. Meanwhile, Yorkshire-Tyne Tees declined to bid, claiming it made no strategic sense.

Westcountry's owners, including the Daily Mail & General Trust, Brittany Ferries and South West Water, decided earlier this year to seek a flotation or sell the company to a trade buyer. Since then, Lazard contacted several ITV companies, encouraging them to bid.

HTV is believed to be the most logical buyer, as it holds a contiguous ITV franchise in Wales and the West, and already handles transmission services for Westcountry. But analysts suggested yesterday that Carlton was likely to have put in a bid, as a first step toward achieving its objective of buying HTV, a long-mooted acquisition target. Carlton had no comment on its intentions toward Westcountry and HTV.

United News & Media, owner of the sales house TSMS, which handles ad sales for HTV and Westcountry, is thought to be interested in Westcountry, and even HTV, to protect the share of national advertising revenues handled in-house. The company declined to comment yesterday. But an insider confirmed: "Of course we've looked at [Westcountry], and the sale house is part of it. But there are no jewels there, no great synergies, so we have to ask ourselves some questions."

Taken together, HTV and Westcountry represent about 8 per cent of national advertising revenues, and TSMS would be concerned about losing that much market share.

In its results statement, HTV said its Harvest Entertainment arm, which groups its rights development and acquisition activities, saw operating profits soar by 19 per cent. Operating margins were about 30 per cent in the broadcasting division, before taking into account the high licence fee the company pays to the Treasury.

Louis Sherwood, chairman, said: "Our commitment to developing and growing our rights business has been wholly justified by Harvest's continuing role as a major driver of growth within HTV."

The company expects to cut costs further over the next year to 18 months, partly through the introduction of digital technology for its news-gathering operations and partly through lower payments to ITN for its share of the national news service. In addition, Chris Rowlands, the chief executive of HTV, said the likelihood of lower licence payments following renewal in 1998 would enhance profits further.

The company declined to comment on the Westcountry bid, or the possibility of a bid by Carlton or United for HTV.