SMG and Carlton anxious to avoid costly auction for control of HTV

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The Independent Online

Scottish Media Group, the ITV to advertising poster concern, yesterday downplayed its interest in acquiring HTV, the Channel 3 franchise for Wales and parts of western England.

Scottish Media Group, the ITV to advertising poster concern, yesterday downplayed its interest in acquiring HTV, the Channel 3 franchise for Wales and parts of western England.

"There are prices at which we would like HTV and there are prices at which we wouldn't," said Callum Spreng, SMG's director of corporate relations. The chief executive, Andrew Flanagan, said SMG would be interested in buying HTV but stressed it would have to be at the right price.

United News & Media sold HTV last month as part of a £1.75bn disposal of its three Channel 3 franchises to Granada Media. Broadcasting Act restrictions on the concentration of ITV viewership in media groups means that Granada will have to sell at least 80 per cent of HTV within six months of the acquisition of the United franchises, which formally closes at the end of September.

Carlton Communications also displayed a cool attitude to a possible acquisition of HTV, which is contiguous to the London-based broadcaster's Westcountry franchise broadcasting to south-western England. "Carlton won't overpay," said a source at the company. "If there's value, we'll look at it." He added: "There's no strategic imperative to this."

SMG and Carlton's apparent determination to avoid a costly auction for control of HTV may work against Granada Media obtaining a top price for the ITV franchise. United acquired HTV for £365m during the last round of ITV consolidation in the mid-1990s. Analysts expect HTV to fetch upwards of £400m.

Mr Spreng expressed stronger interest in absorbing a 5 per cent stake in GMTV, the breakfast-time broadcaster, which Granada is expected to sell as a further condition of the acquisition of United's ITV interests. SMG increased its stake in GMTV earlier this year to 25 per cent from 20 per cent.

News of the ongoing process of ITV consolidation came as the media group, which also publishes The Herald newspaper based in Glasgow, reported a 25 per cent rise in pre-tax profit to £30m for the six months to June. Earnings per share gained 16 per cent to 7.8p as total turnover jumped 37 per cent to £152.7m.

The strong top-line growth reflected a four-month contribution from the £225m acquisition of Ginger Group, which was comprised of Virgin Radio and Ginger Television. The radio arm contributed £6m in operating profit from March to June and is expected to contribute around £15m for the full year.

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