Two bidders drop out of ITN share sale

Click to follow
The Independent Online

Media Editor

Two potential buyers of shares in Independent Television News have taken themselves out of the running, jeopardising the planned sale of a 32 per cent stake in the ITV news provider.

HTV and Yorkshire Tyne-Tees, both ITV licence-holders, have confirmed that they will not take up shares offered by Lazard Freres, the investment bank, on behalf of Granada and Carlton, the media companies.

Ward Thomas, chairman of YTT, said uncertainty over ITN's status as sole supplier of news to ITV made it impossible to agree a price for the shares. "At this stage, we don't know what the price of the shares should be. We do not know if a second news provider might be appointed, and how that would affect the price of the shares."

BSkyB, the satellite and cable broadcaster that operates the 24-hour Sky News, has offered to supply ITV for about pounds 30m a year, compared with the pounds 55m currently charged by ITN. The Independent Television Commission, which regulates the provision of news on ITV, said late last week that it had written to BSkyB inviting the company to expand on its proposals. BSkyB, owned 40 per cent by Rupert Murdoch's News Corporation, intends to reply within 21 days.

BSkyB has also been asked to show how it would meet rules limiting shareholdings in a designated news provider to 20 per cent. It is expected that the broadcaster would establish a separate company, with partners, to offer the service.

YTT's Mr Thomas conceded that the company had made a firm offer for 20 per cent of the ITN shares recently, but that no agreement could be reached. He said the offer would not be renewed. The ownership situation at ITN was confused by a pre-emptive right held by other ITN shareholders, Reuters, Scottish Television and MAI, to increase their holdings when shares are made available.

Lazard insists that there are plenty of potential buyers, but declined to discuss price or terms of the intended sale.

It is believed that most ITV licence-holders would prefer to retain ITN as the news supplier, and submissions to the ITC last month indicate reasonably wide support. But insiders at Sky insist that their bid is serious, and that at least some ITV companies would prefer their service to ITN's.

The competing supply bid has put pressure on Granada and Carlton, which must reduce their holdings in ITN from 36 per cent to a maximum of 20 per cent each by the end of the year to meet government ownership limits. The excessive stakes were the result of takeovers by Granada and Carlton of LWT and Central respectively.

But the ITN contract negotiations are scheduled to begin only in 1996. There are no plans to bring the talks forward, despite the uncertainty surrounding the share sale.

An insider at Granada said HTV and YTT, both of which have complained to the ITC about the ITN news service on the basis both of quality and cost, are merely trying to drive down the price of ITN shares to buy them on the cheap.

"The companies have no intention of subscribing to Sky News. This is just a campaign to force a lower price from ITN for its news coverage or to drive down the price of ITN shares," the source said. It was also suggested that HTV and YTT may be trying to force the sellers to dump shares directly into the market, in order to buy stakes at lower prices later.