Media & Marketing/Emmet Oliver: The race to buy Ireland's second largest television channel TV3 has taken another twist with ITV, a 45 per cent shareholder in the station, becoming the subject of a takeover offer itself.
ITV yesterday rejected a takeover approach from a group of venture capital firms including Apax and Blackstone Group and investment bank Goldman Sachs.
The offer was not a traditional bid, where the shares of a company are valued and a premium added. In this case the bidders offered to inject just £1.5 billion (€2.17 billion) into ITV and then return up to £3.55 billion to shareholders, thereby pushing up the company's debt levels.
ITV's board, led by the chief executive, Charles Allen, said it had "carefully examined the proposals" but was concerned about a "very material increase" in the company's debts.
The destiny of ITV is far from an academic concern for TV3. ITV has pre-emption rights on the 45 per cent stake put up for sale by Canadian group CanWest Global. This means it has to be given a chance to match any bid put up by an outside bidder. Several companies are believed to be interested in TV3 and have made preliminary bids, among them Setanta, UTV and the Carlyle Group - the US private equity firm.
The problem is ITV supplies the most popular programming to TV3, including Coronation Street and Emmerdale. Without this programming in the TV3 prime time schedule the station's value and profitability would be severely dented. Potential buyers who have spoken to The Irish Times have strongly emphasised the importance of the ITV programming deal. Ironically the one channel which would probably welcome a weakened TV3 is Channel 6, the new "pure entertainment" channel which begins broadcasting next week.
With various suitors circling ITV it is unlikely to start off-loading assets, even if TV3 is hardly a core interest. The latest advances on ITV suggest it might want to retain a presence in Ireland.
Recent experience suggests that major UK media companies are very slow to exit the Irish market. For example Emap, which last year purchased Today FM and several other radio stations, is actively seeking to add to its Irish assets and is taking a close look at WLR FM in Waterford.
The reason for maintaining an Irish presence is simple - TV advertising in the Republic was up 20 per cent to €286 million between 2004 and 2005 alone. Radio advertising was up 16.6 per cent to €105 million. With UK advertising lagging way behind this in terms of growth, not too many UK media giants are likely to exit the stage just yet.
Setanta opening
The chances of Setanta picking up some of the rights to the English Premiership have been given a major boost following a European Commission decision. EU competition commissioner Neelie Kroes has decided that Sky's exclusive deal with the Premier League clubs must come to an end. From now on the rights will have to be split between at least two broadcasters.
Already speculation surrounds Setanta and US cable group NTL. Both companies have indicated their desire to win some rights, but BSkyB with its huge resources is still seen as the favourite to grab the lion's share of games. It is believed to have paid over £1.1 billion last time out for its exclusive deal.
The deal as outlined by Kroes is binding and any violation could result in fines of up to 10 per cent of the FA's premier league worldwide turnover.
Sportsman Ireland
The new UK national sports and gaming paper, the Sportsman, started circulating in Ireland yesterday and by September a fully Irish edition is scheduled to appear.
Irish jockey Kieran Fallon is among the writers appearing in the first UK edition. But plans are afoot to recruit an Irish editor and staff during the summer months. At present the paper is selling in Ireland at a weekday cover price of €1.70, which will rise to €2 at weekends. Other prominent sports people contributing are football pundit Andy Gray, snooker player Denis Taylor and darts player Phil Taylor.
The first edition in the UK was not met with universal acclaim. While journalism tends to be a bitchy profession, the promoters of the paper will hardly have enjoyed reading respected sports reporter Oliver Holt's view on the newcomer.
"The Sportsman's problem is that does not have the quality to drag readers away from national papers and it lacks the authority to challenge the expertise of the Racing Post. The Post is a brilliant and established product, a daily bible for punters, and too many of the Sportsman's tipsters are unproven for them to be able to challenge the Post," he wrote yesterday.
Despite this the paper is hoping to crash in on the gambling boom that has swept Britain and to a lesser extent Ireland over recent years.
While most people assume racing makes up most betting activity, in the UK now, football betting is believed to have matched racing in terms of overall spending annually.
"The market has undergone a massive shift in the past five years," said Max Aitken, the newspaper's managing director and a great-grandson of Lord Beaverbrook, the legendary press baron.
"The UK betting market in the past 10 years has grown from £5 billion to £40 billion pounds."
The Sportsman has a startup investment of £12 million sterling from a group that includes Ben and Zac Goldsmith, sons of the late financier James Goldsmith. The paper has a staff of 120, and aims to break even operationally by the end of 2006.
Here in Ireland the Racing Post, owned by Trinity Mirror, is a formidable competitor, but even with its heavy Irish racing content, its average sales are only 7,961. Clearly, the Sportsman will have its work cut out.
Emmet Oliver can be contacted at eoliver@irish-times.ie
