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ITV Cool On Endemol Bid Rumors

Big Brother
CBS

Britain's biggest commercial broadcaster won't say whether it is serious about an approach for the world's biggest commercial independent producer.

LONDON - ITV has played down reports that it is looking at taking full control of Endemol, the debt-burdened media group behind such shows as Big Brother and Fear Factor.

Britain's biggest commercial broadcaster would have to inform the London Stock Exchange if it were in serious talks with the reality producer, but has not done so despite reports suggesting that it is looking at a deal.

A spokesman for ITV said it "did not comment on speculation."

Shares in the broadcaster briefly moved upwards on what some investors saw as a deal that could potentially transform ITV's international scope: Endemol has over 4000 employees and operations in 31 countries and creates the kind of international formats that would boost ITV's global business.

However, the reality producer is currently in the middle of restructuring its €2 billion ($2.9 billion) debt after it looked set to breach its loan covenants. That restructuring process is far from complete.

The restructuring is complicated by the fact that Endemol's shareholders, Mediaset, Cyrte Investments and Goldman Sachs, are also holders of around a third of its debt.

Under the restructuring proposals, other debtholders including Apollo, Centrebridge, Royal Bank of Scotland and Barclays, are thought to be considering writing down a portion of their debt in exchange of majority control of the equity.

It is unclear how ITV could begin to absorb an acquisition on the scale of Endemol with its shares trading at 60 pence (98 cents) per share and likely to go lower as broadcasters face a tough year-end.

The broadcaster's market capitalization as of Wednesday was £2.37 billion ($3.9 billion). Even if Endemol's shareholders accepted a deal where the reality producer's equity was valued at nil, it would still be complex and possibly problematic for ITV to absorb Endemol's $2.9 billion debt.