The Irish television market looks set for a major shake-up with the Canadian group CanWest Global deciding to sell its stake in TV3, the State's second-largest television service.
The Canadian company, which has been involved with TV3 since 1997, is selling its 45 per cent stake in an attempt to reduce its debts. A CanWest spokesman said last night the decision was not a reflection on the station itself, but CanWest's priority was to reduce its debt and sell off non-strategic assets.
A London-based investment house has been asked to find buyers for the stake which some market sources believe could be worth up to €100 million.
Since going on air in 1998, the station has found it difficult to turn a profit, but last year it managed to post its first pre-tax profit. With the economy expected to grow strongly in 2006 and 2007, the stake could prove attractive to international buyers.
However it is understood that under existing shareholder agreements, UK media giant ITV has pre-emption rights to the CanWest stake. This means ITV, which also owns 45 per cent, must be given the chance to bid for the stake ahead of everyone else.
If ITV goes ahead and purchases the CanWest stake, it could take control of the station and this would have major implications for the TV market and in particular RTÉ. At present ITV is worth over €6.6 billion and its buying power in the Irish market would make it difficult for RTÉ to win rights to key programmes. ITV already owns the rights to Coronation Street which runs exclusively on TV3.
At present TV3 has an 11.1 per cent share of national viewing in Ireland, compared to 27.8 per cent for RTÉ One. If ITV acquired the shares it is likely to want to increase this significantly.
Should ITV show no interest in purchasing the shares, the small number of Irish shareholders who together own 10 per cent of TV3 might fund a bid. Among these shareholders is the chief executive of Windmill Lane Ltd James Morris and U2 manager Paul McGuinness. Windmill Lane itself also has powerful shareholders including financier Dermot Desmond.
Staff were told of the changes yesterday although no job losses are expected. Schedules are not expected to be affected.
The TV market is highly competitive with a new service, Channel Six, expected to start broadcasting sometime in the spring. Another station, City Channel, is already available on digital and Setanta Sports is increasing its profile. RTÉ also faces strong competition from BSkyB, which has more than 300,000 digital subscribers and a special Irish edition of Sky News.
While €236 million of advertising revenue goes into the television market each year, the press sector collects almost three times that amount. TV3's core audience is among younger viewers who are traditionally attractive to advertisers.