ITV and NTL to hold merger talks

[Gazer]

ITV and the UK's biggest cable company NTL are to hold talks over a possible merger.
The broadcaster, which is currently without a permanent chief executive, told NTL that it was willing to listen to any bona fide proposal. It was responding to NTL's confirmation that it was interested in a possible combination.
The cable firm, which has already bought Virgin Mobile and Telewest this year, has scheduled an initial conversation with the blue-chip company, which has struggled in a weak advertising market.
NTL said: "This process is at a very preliminary stage and there is no assurance that these discussions will lead to any offer being made for ITV."
The deals with Telewest and Virgin created an operator capable of offering customers the "quadplay" of digital TV, broadband internet access, and mobile and home telephone services.
However, analysts said a merger with ITV would strengthen NTL's position in programming. NTL's content division, Flextech Television, specialises in providing TV channels for the UK multichannel television market. Flextech owns Trouble, Bravo, LivingTV, Challenge and Ftn, and is a 50% partner in UKTV, a joint venture with BBC Worldwide. A deal may also strengthen the pair's position when dealing with content and distribution giants in the United States.
Henk Potts, equity analyst at Barclays Wealth, said of the interest by NTL: "Adding content to their platform of services will put them in a powerful position and make then more of a rival to the likes of BSkyB."
He said the timing of the NTL approach appeared to have been driven by ITV's leaderless position, particularly as the cable firm might otherwise have looked to spend time integrating its mergers with Telewest and Virgin Mobile.
Charles Allen announced his departure as chief executive in August - at the same time as ITV's troubles were highlighted with an 8% fall in half-year revenues for its flagship channel to £654 million. ITV1 - home to Coronation Street and Love Island - accounts for about 90% of the company's total advertising revenues.
ITV was valued at more than £4 billion after shares rose 6% as investors digested the second takeover episode involving the broadcaster this year. In March, Mr Allen fended off interest from private equity firms who had planned to replace him as chief executive with industry veteran Greg Dyke.