ITV To Acquire SMG’s Stake In GMTV For £31 Million
ITV has announced plans to acquire SMG’s stake in GMTV for £31 million and is to bid for the remaining 25% of the breakfast broadcasting network, which is owned by the Walt Disney Company.
The proposed buy-out is part of a wide-ranging deal that will also see ITV take-over the sale of SMG’s national television airtime on both its Scottish Television and Grampian Television licences.
The acquisition is still subject to regulatory approval as ITV currently has a 16.9% holding in SMG. Completion of the deal would oblige ITV to make an offer at the same price to the Walt Disney Company for its shareholding in GMTV.
SMG acquired its original 19% shareholding in the breakfast channel back in 1991 and increased it’s stake to 25% in 2000. However, the Glasgow-based cross-media group, which also owns Virgin Radio, Pearl & Dean and Primesight posters, believes its investment is no longer strategic.
Andrew Flanagan, chief executive of SMG, said: “The ITV merger created a 50% shareholder in GMTV and we don’t want to have a minority interest in someone else’s media business. It is clearly in our shareholders’ interests to sell the stake at an attractive price.”
The acquisition is part of ITV’s ongoing strategy to further develop the single company created following the multibillion merger of Carlton and Granada earlier this year. Charles Allen, chief executive of ITV, explained: “The acquisition of an increased stake in GMTV at a reasonable price will simplify the ownership structure and enable more agile decision making.”
The deal also sees SMG agree to the use of the ITV brand name by ITV plc in a move that ends a long-running dispute between the two broadcasters, which looked set find its way to the High Court.
Allen said: “The ITV name has significant value to all ITV franchise-holders and is synonymous with high quality British television. I’m pleased that we have reached this agreement with ITV plc which clarifies the use of the ITV brand by Scottish TV, Grampian TV and ITV plc.”
The two broadcasters reached agreement on a number of other issues, including the cross-promotion of ITV2 and ITV News on the Scottish Television and Grampian Television franchises, programming arrangements for ITV branded channels and the outsourcing of certain administration functions of the ITV Network Centre to ITV plc.
SMG claims to have made £2.9 million in profit from its stake in GMTV last year. However, the latest media agency estimates, compiled by MediaTel Group, show the breakfast channel saw revenue dip by 4.8% year on year during March to £5 million (see NewsLine).
ITV: 020 7843 8000 www.itv.com SMG: 0141 300 3000 www.smgplc.plc.uk
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