Shareholders in Yorkshire Television are being urged to reject their TV franchise in return for a free stake in runner-up White Rose Television.
White Rose is confident that it would be awarded the licence by default if Yorkshire decided not to accept the franchise, having passed the quality test but failed by bidding £20m less than YTV.
White Rose argues that Yorkshire share- holders would have both a stake in a TV franchise as well as a holding in a successful production company (as Yorkshire would become should it offer up its licence) if they agree to the plan.
In addition, White Rose would almost certainly generate higher profits as a franchise holder than would Yorkshire, since it will be paying far less to the Treasury (White Rose bid £17.4m compared to Yorkshire’s £37.7m).
White Rose has offered Yorkshire share- holders a free 25% stake in the company and some YTV shareholders are thought to be amenable to the proposition.
Yorkshire’s management, meanwhile, is strongly opposed to the deal, and major shareholders Pearson and WH Smith (each with a 19.9% holding) have formally recommended that Yorkshire accept the licence.
Should Yorkshire reject the licence, the ITC would then have to decide whether it should go to the next highest bidder (White Rose) or be re- advertised; it is not certain that White Rose could step into Yorkshire’s shoes.
Analysts suggest that , accounting for inflation, Yorkshire may end up paying £300m more over the licence period than would White Rose. In addition, figures from James Capel estimate that Yorkshire could be worth more without its licence, operating more efficiently as an independent producer without the onus of the £37.7m cash bid.
The issue is likely to be debated at Yorkshire’s shareholders’ meeting on 20 November.
