Private equity group Doughty Hanson has agreed to buy TV3, the Republic's second-largest television channel, in a deal that values the station at €265 million.
The bid is subject to British broadcaster ITV, which holds a 45 per cent stake in the Irish channel, waiving its pre-emption rights. These entitle it to match any bid put forward by another company for the stake it doesn't already own.
Indications suggest that ITV does want to hold onto the Irish channel, but that it will not pay over-the-top prices. It now has 90 days to respond to the offer.
In addition to ITV, which owns the rights to Coronation Street - TV3's highest rated show - the Irish channel is currently owned by Canadian communications group CanWest Global and a consortium of private investors, including Paul McGuinness and Windmill Lane Ltd.
CanWest put its 45 per cent stake up for sale earlier in the year and by early May three bidders were left in the race - UTV, Doughty Hanson and another private equity group, Veronis Suhler Stevenson. Neither of the other groups has made a bid.
While officially only the CanWest stake is up for sale, it is accepted in the market that the whole company may be sold if the right offer is made, and that if ITV doesn't buy the remaining stake it is likely to want to get out. The whole group was initially valued at about €262 million.
"TV3 is a high-quality broadcast business with an excellent market position and strong growth potential," said Steven Bone, head of Doughty Hanson. "We believe our offer to acquire TV3 provides good value for all its current shareholders."
The proposed transaction will take the form of a €140 million equity investment and debt provided by Anglo Irish Bank.
In a statement, Doughty Hanson said the acquisition was in line with its strategy to acquire market-leading, mid- to large-sized European businesses. After RTÉ 1, TV3 is the most-viewed television channel in the Republic, with sales and EBITDA growth of 8.3 per cent and 21.5 per cent respectively over the last three years, according to Doughty Hanson.
This year is predicted to be a strong one for the station, with television advertising revenue expected to rise sharply.
Doughty Hanson said that, if it is successful with the bid it will work with TV3's management to grow the business and increase its position in the market by continuing to strengthen its programming mix and build its peak audience share.
Earlier this year, market sources suggested CanWest had been seeking to sell its TV3 stake for some time, though ITV had shown no willingness to buy. Any exit from the business by ITV could be controversial for the station's programming, a large amount of which is from ITV.
