LWT cools on bid for YTTV: Institutional shareholders blunt the London station's defence strategy

Click to follow
The Independent Online
FOLLOWING institutional shareholder pressure, London Weekend Television is expected to play down prospects for a link with Yorkshire-Tyne Tees in the circular defending itself against the pounds 600m hostile takeover bid from Granada Group, which it will release to the market tomorrow.

This is despite intensive talks between LWT's chairman, Sir Christopher Bland, and Ward Thomas, the 69-year-old TV veteran who stepped into the breach at the troubled YTTV when Clive Leach was forced to resign as chairman last month.

LWT had planned what has become known as a 'quartet strategy', in which it would buy YTTV but sell the Tyne Tees franchise to Anglia TV, as the recently amended TV regulations do not allow anyone to own more than one ITV station.

The strategy would protect LWT and Anglia - which is rumoured to be a target for Lord Hollick's media and finance group MAI - from bids from other ITV companies and force Granada to drop its offer for LWT. Any deal would have to be announced before 14 January or would have to wait until Granada's bid either fails or is successful under the Takeover Panel's rules.

However the plans look like floundering in two areas - the practical difficulties of splitting Tyne Tees from Yorkshire, following the pounds 11m of savings achieved when the groups merged last year, and opposition from some of LWT's institutional investors.

LWT has been adamant that it would do a deal only if it enhanced shareholder value. 'There will be no poison pill,' said a spokesman.

The defence document is expected to repeat LWT's arguments that shareholders will do better if the group remains a pure TV company rather than becoming subsumed into a wider conglomerate, as Granada is.

However, there is speculation that LWT could be holding out to see if a foreign bidder will bid more than Granada.

It emerged this weekend that several groups are preparing to take advantage of the next change in the ITV rules on 1 January, when the 15 franchise holders can be bought by non-television companies and organisations from other parts of the European Union.

The management of at least one ITV company is understood to be preparing a buy-out bid for its employer. This will be possible in the New Year because the MBO bidder will count as a non-franchise holder.

Three or more consortia are also examining likely opportunities in the 1994 regulatory climate. These are combinations of EU and British non-TV companies. They are believed to see themselves as potential white knights, ready to come to the 'rescue' of franchise holders that receive unwelcome bids.

Julian Mounter, a former Thames Television executive who has made a successful television career in the Far East, has been linked with one of these consortia.

From Hong Kong he said: 'There is a group of substantial investors who have looked at this. They have asked me to assist them as their potential chairman. At the moment our view is that given the present frenzy, we are not going to do anything precipitate.'

LWT is a prime example of such a victim, and will be eligible for rescue as soon as the rules change. Some observers believe that its YTTV plan is little more than a smokescreen until a more credible alternative to the Granada bid can be announced.

Melvyn Bragg, who presents the South Bank Show for LWT and is chairman of Border TV, said: 'ITV is a market where piranhas are like tiddlers, and companies like Border have to keep on their toes.'