Ulster TV loses interest in Scottish merger

Ulster Television announced today it is no longer interested in a merger with Virgin Radio owner SMG.

UTV said it had taken into account SMG’s half-year results and the continuing weakness in the advertising market faced by the ITV network in reaching its decision.

Last week, SMG, which owns most of Scotland’s commercial TV network, announced it is to sell its advertising businesses Pearl & Dean and Primesight as it posted a 38% hike in pre-tax profits to £8m (€11.8m) for the six months to June 30 due to cost savings.

Turnover fell 2% to £88.6m (€131m), which it said was down to a fall in sales revenues in television.

In the firm’s results statement, chairman Chris Masters said the outlook for advertising markets remained challenging for the rest of the year.

SMG had previously rejected two “unacceptable” merger proposals from talkSport owner UTV. The first proposal gave its shareholders a 50% stake in the proposed company while the second bettered this only slightly at 52% – even though SMG has a market value around £60m (€89.1m) higher than UTV.

SMG had said it would still be interested in holding talks with UTV over a potential merger if it represented better value for its shareholders.

Under takeover rules, UTV is not able to annunce a possible offer for SMG for a six-month period unless there is a change in ircumstances.

This could be if an agreement from the board of SMG was forthcoming, if there was an announcement by a third party of an offer for SMG or if SMG announced a reverse takeover.

Shares in SMG fell 6% today as the City digested the news, while UTV fell 1%.

Media mogul Chris Evans holds nearly 10 million SMG shares, or just over 3% of the company, after he sold Virgin Radio and his TV company Ginger Productions to SMG three years ago for £225m (€334m).