ITV in $190 mil bond issue

Instead of selling digital transmission business SDN

LONDON – ITV has scrapped the planned firesale of its cashflow-generating digital transmission business SDN, opting instead to raise £120 million ($190 million) in the bond markets on hopes that the ad market decline is steadying.

The broadcaster, which had earlier said it would sell off SDN as part of a series of moves to shore up its balance sheet and pension fund deficit, said that it was in talks to use part or all of the SDN business as an asset to set against the pension fund decline, and was optimistic that the worst of the ad revenue collapse was over.

"The rate of decline in U.K television advertising has continued to ease across the second half of 2009," the broadcaster said, in a statement to the London Stock Exchange.

ITV said it was "on course to outperform" the U.K. TV advertising market for the full year, predicting that overall advertising revenues across its digital and free-to-air channels would be down 3% year-on-year in October and November, much improved on the double digit declines of earlier months of the year.

Acting chief executive John Cresswell said full-year revenues from digital multiplex owner SDN were predicted to in excess of £40 million ($63 million), and represented significant potential value for investors.

"Seeking to deploy SDN as asset backing to the pension scheme will help us manage our pension risk, whilst continuing to benefit from the strong cashflows that business delivers. We believe it is the right decision for ITV, maximizing value for shareholders," said Cresswell.

"Whilst we are not yet seeing a recovery in U.K. television advertising, the trend is improving across the second half and into the fourth quarter," he added.
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