Predators circle ITV as board prepares shortlist for chief's job

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The Independent Online

ITV's board is to draw up a shortlist of contenders for the vacant chief executive post at a meeting early next month. There is intense speculation in the City that the broadcaster will not be given time to appoint a new leader because there will be a takeover bid first.

It is understood that the board will meet on Monday 6 November to reduce the list of possible candidates for the chief executive post to a shortlist. These candidates would be interviewed by ITV's headhunters, Zygos, before being interviewed by the ITV board, probably in December.

Stephen Carter, the former chief executive of Ofcom, is the front-runner for the job. It is thought that a faction on the board - centred around James Crosby and Sir George Russell - favours a more "radical" candidate. They have urged consideration of Roger Parry, the chairman of Johnston Press, who has stated that he would split ITV's two businesses, its production arm and its channels business, if he were appointed.

It is thought that neither Mr Carter nor Mr Parry has so far been approached about the job.

According to City and industry sources, there are at least two "serious" predators circling the company. They believe a bidder will take advantage of the lack of a chief executive to make an offer for the company.

The insiders said that there is at least one private equity group and one trade buyer doing the numbers on ITV. A host of private- equity players have "run the slide rule" over ITV in recent months, but one is understood still to be doing detailed work on a bid.

Among the possible private-equity bidders are Apax, which made an abortive 130p-a-share offer six months ago, KKR, where Lord Hollick, formerly a senior player in ITV, now works, and Permira. The most likely trade buyers would be Germany's RTL, which owns Five in this country, or a US group, such as Viacom or Disney.

ITV shares closed unchanged yesterday at 105p. There is widespread scepticism that private equity can "make the numbers work", given the relatively low level of debt that could be raised against the uncertain and falling revenues at ITV. A research note from analysts at ABN Amro yesterday argued that a bid of up to 120p could be "justified" for a private equity group.

"ITV would appear very attractive to a private equity consortium with a four-year exit strategy, in our opinion. In four years' time, it will not face many of its current issues," ABN said. The broker pointed out that a regulatory mechanism, known as CRR, which depresses ITV's ad revenues, is expected to be lifted by the end of next year. This would transform the economics of ITV.

ABN also said that, by 2010, ITV's market share should have stabilised.