Reports have been leaking in over the weekend that Liberty Global, the owners of Virgin Media, are looking at placing a takeover bid for ITV. The telecommunications and television company owned by billionaire John Malone has reportedly been canvassing investors ahead of a meeting with the channel's board of directors. Thus far it would appear the main stumbling block has been the price, but the company has not been shy when it comes breaking out the big bucks in the past. Indeed, just 2 months ago, they bought out BSkyB's remaining 6.4% stake in the channel, which is the UK's largest commercial broadcaster thanks to critically and commercially acclaimed hits such as “Downton Abbey,” “The X Factor” and “Coronation Street.”
Thus far it would appear the main stumbling block has been the price, but the company has not been shy when it comes breaking out the big bucks in the past
Other large investors in ITV include Fidelity, which has a nearly 8% stake, BlackRock, with 4.9%, and the Californian fund manager Brandes, which has 4.8%. It's worth noting that ITV's shares are currently trading at 210p, their highest since the dot com crash, valuing the company at more than £8.4bn. Five years ago ITV shares were under 50 pence. This means the acquisition would be a huge, but expensive win for Liberty, who have been funding their current cable acquisition spree across Europe with debt. Indeed, the credit rating agency Moody's, said that when Liberty bought its initial stake in ITV is was “Credit negative as it uses incremental debt capacity at a time when Liberty Global’s leverage metrics remain stretched”.
The group's debts currently total more than $41 billion, meaning it's already dangerously close to the limit of its stated target of between four and five times free cash flow. The ITV buyout could tip them over the edge. Despite these incredible debts, Malone has been described by one financial source as a “Debt genius,” who should quite comfortably be able to find a way to fund the takeover for the right price.
The acquisition would be a huge, but expensive win for Liberty, who have been funding their current cable acquisition spree across Europe with debt
There has been speculation about the move since the beginning of August, when Channel 4 boss, David Abraham stated he believed that "Liberty and other US shareholders are trying to play footsie with ITV; which could eventually put Britain’s largest commercial channel in the hands of Dr John Malone, resident of Colorado and who also now controls the Virgin Media, All3Media and Discovery." The other US shareholders he's referring to include NBC Universal, who have yet to show their hand. At the time of writing, neither ITV or Liberty Global were willing to comment.
Official Liberty Global Website
Benjamin Hiorns is a freelance writer and musician from Kidderminster in the UK who is more of a BBC man than an ITV man. Although saying that, he is partial to the odd spot of Downton.
