On the surface, the decision by Canadian media group CanWest Global to sell its 45 per cent stake in TV3 might appear a curious one. The station only recently managed to post its first pretax profit, the station is set for a bumper year in terms of advertising revenue and several of the station's programmes, most notably Coronation Street, are ratings winners.
Since first getting involved in TV3 back in February 1997, CanWest has been a faithful shareholder. While some of the original investors have exited the business, CanWest has stuck with the project, even though it has been very much a slow burner.
Taking on the might and resources of RTÉ was never going to be easy. While TV3 has occasionally been able to dent RTÉ seemingly impregnable exterior, such as when it grabbed Coronation Street from the State-owned broadcaster, overall it has been arduous work. To many observers the decision to sell out after so many years of heavy lifting will come as a surprise.
But the key factor in the decision relates to CanWest's own financial position. TV3 went on air in 1998, but since then a lot of things have changed at CanWest. Last week in Toronto, Leonard Asper, the chief executive of CanWest Global, acknowledged that the company's debt mountain had now become a major drag on profits. Interests costs at the company are high and Mr Asper warned that asset sell-offs and layoffs could not be ruled out.
It would seem, on the basis of yesterday's news, that asset sell-offs are now on the agenda in Ireland, although lay-offs are not. CanWest has appointed London investment house, Hawkpoint Partners to sell its stake. It is not clear who will be in the running to take it on.
It is believed that, under an existing shareholders' agreement ITV, which owns 45 per cent, has pre-emption rights to CanWest's stake. In other words CanWest must allow ITV to match any offer from another bidder.
While the sale of the CanWest stake may appear on the surface not to affect RTÉ, it may turn out to be very relevant. For example there would be great nervousness in Montrose if ITV decided to take over the 45 per stake CanWest stake, giving it 90 per cent control of the station.
ITV is by European standards a serious television player. With a market capitalisation of €6.6 billion it would represent very serious competition for RTÉ. In fact, it was TV3's links with ITV that left RTÉ without Coronation Street in the first place.
ITV has has held its 45 per cent stake since 2000 and has not given any indication of wanting to expand it. In fact most reports have suggested the opposite - that it might seek to offload the stake. However, the imminent departure of CanWest might alter these calculations. If ITV took up the shares it would be one of the most significant shake-ups of the Irish media for many years. But it remains a big "if" right now.
Various television companies around the world might also take an interest, though the dominance of RTÉ will probably discourage many. The returns from TV3 are hardly earth-shattering in financial terms. Its latest results, released last week, showed that CanWest made operating profits of €4.1 million in the three months to the end of November.
While this is a respectable performance, it is not the kind of profits the large US TV groups are likely to get too excited about.
Competition rules could rule out companies like BSkyB. The other possibility is that existing Irish shareholders, who own 10 per cent, might step in. Among these are U2 manager Paul McGuinness and Windmill Lane Ltd.
Either way what's happening off the screen could prove more interesting than the on-screen entertainment over the next few months.
