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Last Updated: Wednesday, 20 September 2006, 14:25 GMT 15:25 UK
UTV scraps plans for SMG merger
Radio microphone
SMG snubbed UTV's approach
UTV, the owner of Ulster Television and Talksport, has dropped plans to merge with fellow broadcaster SMG after the latter rejected its approach.

Under stock market rules, UTV cannot now mount another bid for the Scottish firm, which owns Scotland's STV as well as Virgin Radio, for six months.

SMG rebuffed two approaches from UTV, arguing that its shareholders were not being offered a good enough deal.

SMG's shares fell nearly 8% after it announced its decision.

Shares in UTV also fell but by just 0.2%.

Walking away

UTV's merger proposal would have seen SMG investors ending up controlling 52% of the combined firm's shares.

The board of UTV has taken into account the ongoing weakness in the advertising market franchise faced by the ITV network
UTV statement

SMG said this was "unacceptable" given the value of its own businesses and the fact its stock market value is higher than its rival's.

SMG held open the prospect of further discussions but only if the crucial issue of share ownership could be negotiated.

UTV said on Wednesday it was walking away from the deal although it said it reserved the right to reconsider its position within the proscribed six-month period should SMG receive another bid approach.

"In reaching its decision, the board of UTV has taken into account the interim results of SMG and the ongoing weakness in the advertising market franchise faced by the ITV network," it said in a statement.

SMG saw its television revenues fall 7% in the first half of the year as the advertising market remained weak.

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