Saban, RTL come courting for BSkyB's stake in ITV

Reports boost long-dormant stock price

ITV shares leapt 10% in early trading Monday on reports that European broadcast group RTL and media mogul Haim Saban have expressed interest in acquiring BSkyB's 17.9% stake in the company in a deal that could value the stake at as much as £300 million ($594 million).

ITV shares topped the 70 pence ($1.38) mark before closing the day at 64 pence ($1.27), the biggest percentage rise in the commercial broadcaster's share price in more than a year. The past 12 months have seen its shares almost halve in value.

BSkyB has been ordered to sell down its shares in ITV after competition regulators judged that the satcaster's piece in Britain's biggest commercial broadcaster was anticompetitive.

News Corp.-owned BSkyB paid £1.35 per share in November 2006 to become ITV's big-gest shareholder, astounding the city and media circles with an audacious £940 million bid.

The satcaster is currently mounting a legal challenge of the Competition Commission's ruling, which was backed by business and enterprise secretary John Hutton, that it should sell down its ITV stake to less than 7.5%.

RTL, Europe's biggest tele-vision company, would likely have to clear competition hurdles of its own if it acquired the ITV stake given that it owns outright ITV's smaller commercial competitor Five. The two broadcasters compete for high-profile U.S. fare, program commissions and advertising revenue.

Media entrepreneur Saban made "Power Rangers" a global brand and sold his share in Fox Family Worldwide to News Corp. for $5.1 billion. He also bought German commercial television network ProSiebenSat1 in 2003, selling it to private-equity firms Permira and KKR three years later for $3.5 billion.

Analysts said RTL might find it more difficult to fund the deal than Saban and perhaps has different investment priorities.

"RTL's parent company, Bertelsmann, is still quite indebted (more than €6 billion at the end of 2007) and so the war chest is not full," an investment note from Credit Suisse said. "In our view, RTL's investment priority might be small emerging-market broadcasters, Internet businesses and content/production companies to bolster FremantleMedia. That said, we do not know how much firepower Haim Saban has at his disposal after exiting Pro7Sat1."

RTL and ITV declined comment on the speculation, which first was reported in the Telegraph newspaper.