Branson gets behind NTL/ITV proposal

The man behind the Virgin brand, Richard Branson, is backing the proposed merger between British cable operator NTL and broadcasting company ITV, according to the FT which did not cite sources.

Rumours of the proposal emerged Thursday with some suggesting the deal could be worth as much as £9bn ($17.25bn). ITV is the UK’s largest commercial broadcaster but has been visited by hard times in recent years with competition from Sky and the BBC – particularly in news – forcing the organisation into several uncomfortable moves, including axing its rolling 24hr news channel in 2005.

In a statement, NTL said: “NTL confirms it has advised ITV of its interest in exploring a possible combination transaction and has scheduled an initial conversation with ITV to that end.” It added that the process was at a “very preliminary stage… no assurance that these discussions will lead to any offer being made for ITV.”

Branson is NTL’s biggest shareholder with a stake of almost 11 percent and has, according to reports, a long standing ambition to be involved in the broadcast business. However, Jan Hein Bakkers, analyst with IDC, said any talk of another buyout from NTL represented a step too far, so Branson may have to wait. “Another merger or acquisition for NTL while it is still integrating with both Telewest and Virgin seems like it would create problems,” Bakkers said: “There’ll be several challenges to integrate this and my opinion is that at this point in time they already have their hands full. I see the argument that they need content but they don’t necessarily need to buy a company to get it.”

ITV is, currently, rudderless and continues to search for a new chief executive after Charles Allen’s departure in August. Allen was forced to quit after a 15-year stint at the broadcaster following a sharp drop in advertising revenue and several disasterous programming decisions such as Love Island and Celebrity Wrestling.

NTL meanwhile, is still recovering from its assimilation of Telewest and the Virgin brand which it adopted company-wide this week.

Ovum analyst Aleksandra Bosnjak described the potential union as a “a good Hollywood story” but winced at the prospect of another giant merger. “From a business strategy perspective, any idea of a full-scale merger between these two types of giants provokes an instant anxiety, given the amount of due diligence and audit required for a job of such unprecedented size.”


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