ITV rejects merger move from NTL

ITV says the offer undervalues the firm

ITV has rejected a merger proposal from the cable firm NTL and has given details of what NTL was offering.

ITV said there was little strategic logic for it to combine with NTL and the offer materially undervalued ITV.

Satellite broadcaster BSkyB shocked the financial world on Friday by buying a 17.9% stake in ITV for £940m.

NTL's largest shareholder, Sir Richard Branson, attacked the power of Mr Murdoch, the owner of BSkyB, and urged the government to "stand up" to him.

We have got rid of democracy in this country Sir Richard Branson

He said Mr Murdoch's media empire meant he had the power to choose the country's Prime Minister and the extent of his ownership meant "we have got rid of democracy in this country".

Earlier he had called on the Office of Fair Trading to intervene and force BSkyB to sell its stake saying it was a "blatant attempt to distort competition."

Ofcom probe

Ofcom now says it has asked both ITV and BSkyB to comment on whether they think BSkyB's share acquisition represents a change of control in one or more of the licences held by ITV.

The regulator says it would normally aim to decide on whether there had been a change of control within six weeks.

BSkyB has said it had done nothing wrong. Current UK media ownership rules mean the satellite broadcaster is prevented from controlling more than 20% in ITV.

Careful scrutiny

The NTL proposal to merge with ITV, made on 9 November, had been conditional on due diligence, on approval of the ITV Pension Scheme Trustees, and on regulatory clearance.

The board of ITV met on Monday to consider the proposal, which had been "thoroughly analysed" by its advisers.

NTL had offered 105p in cash, and new NTL shares worth 17p, for each ITV share.

But ITV said that after detailed and careful consideration it had unanimously decided to reject the merger.

An ITV statement said: "The board believes that whereas there is obvious appeal to NTL in gaining control of ITV's substantial and successful business, from ITV's perspective there is little, if any, strategic logic for ITV to combine with NTL."

Advertising pressures

Sir Richard became a 10.5% shareholder in NTL when he sold Virgin Mobile to the firm earlier this year and NTL plans to change its name to Virgin Media early next year.

ITV is the UK's largest commercial broadcaster offering free-to-air services.

But it has been under pressure after being hit by falling ratings and declining advertising revenue. It is also without a chief executive.

Earlier in the year, other private equity groups were reported to be preparing a bid for ITV.