Bidders circling ITV again

Mediaset, Saban and RTL eying BSkyB stake

By STEVE CLARKE

Speculation is growing that ITV, Blighty’s biggest terrestrial web, will once again be subject to a takeover bid, with reports suggesting that Italy’s Mediaset could be interested.

The trigger for a bid is likely to be a ruling, due later this week, from U.K. regulators on whether News Corp.-backed paybox BSkyB must sell its 17.9% stake in ITV because its ownership of that stake restricts competition.

If, as expected, BSkyB is told it must offload the bulk of its holding, attempts to buy this stock may signal the start of a battle to own ITV outright.

The broadcaster’s stock price fell to a record low of 37.7p (64¢) in the past seven days. It closed at just over 82¢ on Monday, down slightly from 85¢ on Friday afternoon, when bid rumors started to circulate.

“At its current price, anyone who has designs on ITV has got to start thinking seriously about making a move,” said U.K. media commentator Steve Hewlett.

Reports over the weekend suggested that BSkyB has been sounded out by potential buyers who, according to the Italian press, include Prime Minister Silvio Berlusconi’s Mediaset broadcast group.

Germany’s pan-European broadcaster RTL, which owns Blighty’s Five webs, and Israeli-American media mogul Haim Saban are also reckoned to be in the picture, as are various private equity groups.

“BSkyB will want to minimize its loss on the stake (bought at $2.70 a share in November 2006) and not pass up any opportunity,” Hewlett added. “A trade buyer with or without a private equity group is a very real possibility.”

BSkyB is likely to stand a better chance of cutting its losses if it offloads the entire stake rather than the 10% or so that regulators are likely to insist upon.

While ITV continues to show signs of recovery, growth is difficult in such a competitive market.

The web’s assets, which include a production business and an extensive content library, could be worth more if they are broken up by other players who already operate in some of these areas.