NTL's chances of gaining control of ITV looked increasingly remote yesterday as the UK broadcaster's board rejected its first bid proposal and signalled that it would not recommend to its investors any future deal involving NTL shares.
NTL, the US-listed cable group, said it was "considering all of its options" but Sir Richard Branson, its largest shareholder, accused ITV's board of "closing the door on NTL without even seeking to discuss the strategic merits of a combination".
ITV yesterday revealed that NTL had offered 105p in cash for each ITV share and NTL stock worth another 17p on November 9th. The value of the paper element fell to 15.4p per share by last Friday when British Sky Broadcasting (BSkyB), NTL's satellite rival, acquired 17.9 per cent of ITV.
ITV's statement that it saw "little, if any, strategic logic" in combining the UK's only cable company with the free-to-air broadcaster will complicate NTL's efforts to come back with another offer. Although NTL described the proposal as its "initial approach", it would now have to come up with a full cash bid, increasing the amount of debt required to fund the offer.
Banks might be reluctant to lend more to the already heavily indebted group as BSkyB's stake makes it harder for NTL to win the 75 per cent control it needs to consolidate ITV's cash flows.
"A week ago [ ITV] saw the obvious benefits of Virgin Media and ITV coming together," Sir Richard said. "What has changed is that [ Rupert] Murdoch has bought 18 per cent." He called on UK politicians to "stand up to" Mr Murdoch, the chairman of BSkyB and News Corp, arguing that his investment in ITV "has already had a material influence on the company and damaged the plurality of the British media".
Lord Puttnam, who helped amend a 2002 Bill to subject UK media bids to a public interest test, argued that the BSkyB stake "blows competition in the media completely out of the water".
ITV said its board had concluded that the terms offered by NTL "materially under-valued ITV". NTL's price was below both the 130p a share private equity approach ITV's board rejected in March and the 135p BSkyB paid for its £940 million (€1.39 billion) stake.
Investor focus is now likely to return to ITV's search for a chief executive.
