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ITV Board Rejects NTL Merger Proposal

The Board of ITV has rejected a merger proposal from NTL as one with "little strategic logic."
In a statement, the Board said it believed that "whereas there is obvious appeal to NTL in gaining control of ITV's substantial and successful business, from ITV's perspective there is little, if any, strategic logic for ITV to combine with NTL.
"The Board feels unable to recommend to ITV's shareholders that they should take NTL stock as part consideration for their ITV shares."
ITV also said that the proposed offer from NTL "materially undervalued" ITV.
In a surprise move earlier this week, BSkyB announced the acquisition of a 17.9% stake in regional broadcasting conglomerate ITV at a cost of nearly one billion.
BSkyB said it wished to "explore options to create value in the interests of both BSkyB's and ITV's shareholders."
The BSkyB acquisition of ITV shares was not overt and took place without the prior knowledge of the ITV Board of Directors. However, BSkyB has communicated to ITV's board its intention to be a "supportive shareholder".
BSkyB has declared no intention of acquiring shares that would result in BSkyB's stake exceeding 19.9% or making an offer for the whole of ITV's remaining share capital. Though to do so would contravene the Communications Act 2003.
The markets reacted poorly to the news that ITV had received expressions of interest from NTL and RTL. ITV shares fared even more badly on the news that BSkyB had swooped to acquire a 17.9% share stake.
NTL shareholder Richard Branson rounded on BSkyB’s move as "a blatant attempt to distort competition even further by blocking any attempt to create a strong and meaningful competitor."
In a statement, Sir Richard said that BSkyB's move was a breach of competition laws and called on the OFT to intervene.
For their part ITV said it looked forward to having discussions with BSkyB.
Ofcom has invited both ITV and BSkyB to comment on whether BSkyB's acquisition of shares in ITV represents a change of control of one or more of the licences held by ITV.
If Ofcom were to conclude that a change of control had taken place, Ofcom would then need to review the effects - or likely effects - of such a change of control on ITV's licensed services; for example, original productions, news and current affairs programmes and regional programming.
As the regulator responsible for broadcasting, Ofcom carries out change of control reviews as one of its duties under the Communications Act 2003.
The Office of Fair Trading (OFT) is responsible for considering whether there is a merger for competition purposes. As the sector regulator, Ofcom liaises with the OFT on its assessment of any merger in the communications sector.
In addition, if there is a merger, the Secretary of State for Trade and Industry may choose to ask Ofcom to consider whether there are any broadcasting and cross-media public interest considerations, including issues of plurality of ownership.

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