NTL drops bid to purchase ITV
EmptyU.K. cable firm NTL, fronted by Richard Branson, told the stock market in London on Wednesday that it is officially dropping its bid to purchase British commercial broadcaster ITV.
President and CEO Stephen Burch told an investor conference in New York later in the day that NTL already has initiated talks with new ITV executive chairman Michael Grade about potential commercial arrangements and relationships that would bring it at least some of the benefits his firm sought in the takeover play. He also said subscriber growth has improved in the current fourth quarter, which was part of the reason NTL felt it could move on to a content deal in the form of ITV.
With that transaction out of the picture for now, Burch and chairman James Mooney also vowed to continue looking for possible content acquisitions or arrangements with U.S. and smaller U.K. players.
NTL, listed on the Nasdaq, said Wednesday that "it has no present intention of making an offer for ITV as it believes a transaction between ITV and NTL is unlikely to be attained on terms acceptable to NTL."
The cable operator said it has abandoned its interest to "focus on integrating NTL, Telewest and Virgin Mobile, driving cost synergies, improving operational effectiveness and leveraging its content assets."
The change of heart comes less than two weeks after the cabler's initial £5 billion ($9.5 billion) cash-and-stock merger approach was unanimously rejected by the ITV board and U.K. satcaster British Sky Broadcasting snapped up a 17.9% interest in ITV (HR 11/21).
NTL's tabled bid valued ITV at £1.22 ($2.30) per share, with £1.05 ($2) in cash and the balance made up in new NTL shares. The bid fell short of the £1.35 ($2.56)-per-share price BSkyB subsequently paid for its stake in ITV.
NTL said it has "submitted its views on this purchase (of ITV shares by BSkyB) to the Office of Fair Trading and OFCOM because it presents serious competition and public-interest issues."
The cable operator also said it reserves the right to resurrect its interest within "the next six months" under takeover and merger rules. Such changes, NTL said, would include a decision by BSkyB to sell "all or a material part of its take in ITV."
NTL is clearly still smarting from BSkyB's share purchase and suggested in the statement that "the fact that Sky would spend nearly $2 billion to acquire its stake immediately following the mere announcement of NTL's proposed combination, before the ITV board had an opportunity to respond, highlights the magnitude of the competition issues involved."
Mooney expanded on that theme at the annual UBS Global Media and Communications Conference on Wednesday in New York, telling attendees: "Sky has finally overstepped their bounds," which has created some political opposition and concerns over potentially anti-competitive behavior. "This will ultimately help us," Mooney added.
He also suggested that BSkyB won't be able to strike the kind of commercial arrangements that NTL is now hoping to negotiate with ITV.
Burch also struck bullish tones, saying that "for the first time ever, Sky is concerned about us" and comparing the satellite TV giant controlled by News Corp. to "a cornered dog."
Mooney shrugged off investor and analyst concerns over NTL's bid for ITV. As key benefits, he mentioned synergies in the tax and advertising sales areas, savings from a headquarters consolidation, the chance to produce content for pay TV, mobile phones and the Internet as well as cross-promotional opportunities and the chance to use ITV's video-on-demand library.
He also said a deal would have leveled the playing field with BSkyB and enabled NTL "to compete for sports and movies."
Burch also vowed to keep a focus on content opportunities in the future. "This is not the end-all and be-all," he said. But it is "an arrow in our quiver" and remains important.
Stuart Kemp reported from London; Georg Szalai reported from New York.