Shares in Ulster Television soared on the London market yesterday, following the revelation that Scottish Media Group had spent £14.1 million sterling to build up a 15 per cent stake in the firm. In a dawn raid, Scottish Media snapped up 6.9 million UTV shares but also stated that it had no plans "at this stage" to make a full takeover bid.

In heavy trading in London, UTV shares jumped from 166p to the 205p paid by Scottish Media for its stake and at the close the shares were on 198p, a rise of 32p on the day. At the closing price, UTV is valued at £104 million sterling (£113 million).

There was also some speculation that UTV may use its cash pile for a 15 per cent share buyback, a move that would automatically increase the Scottish Media stake to close on 18 per cent, if the Scots opted not to sell shares back to the company.

The view in the market is that while Scottish Media - which has just made an agreed £105 million sterling bid for Grampian Television - has made a strategic move aimed at preventing any of the other British independent television companies making a bid.

Scottish Media's finance director, Mr Gary Hughes, said that his company would consider increasing its stake in UTV if stocks becomes available. Scottish Media could increase its stake to 29.9 per cent before stock exchange rules governing takeovers would force it to mount a formal bid.

Mr Hughes said the stake in UTV would help to prevent the ITV commercial network from becoming to biased towards English-based companies. He said both companies enjoyed distinct identities, separate regional economies and high levels of brand awareness.

Ulster TV is one of the UK's most watched regional broadcasters, regularly winning the highest share of local viewers in the ITV system.

Scottish Media managing director, Mr Andrew Flanagan, said: "We have made an investment in Ulster in view of the rapid consolidation that is taking place in the ITV system as a whole.

"The move underlines our common interest in maintaining the presence of strong players who value quality regional programming and identity."

Scottish Media has already expanded into the print media with the acquisition of the Glasgow Herald and Evening Times for £120 million sterling.

Although small in comparison with the leading independent television companies, Ulster TV is highly regarded in the sector, both for its financial performance and the quality of its programming. Analysts said that it would be an ideal fit with Scottish Media. "It would create a very profitable `pan-Celtic' media group," said one analyst.

Ulster TV made pre-tax profits of £9 million sterling on sales of £34.5 million last year, with £1.2 million of the profits coming from the company's £10.8 million cash pile.

Current trading is thought to be more difficult than last year, and Davy Stockbrokers have forecast a small fall in profits to £8.5 million sterling in the current year.

Although there are 15 independent television stations in the UK, the lifting of the two-station restriction on ownership has meant that ownership in the industry has become concentrated on three media giants - Granada, Carlton and United News & Media.