UTV Media in talks to sell TV assets; ITV tipped as buyer

By Noor Zainab Hussain and Paul Sandle (Reuters) - Northern Ireland's UTV Media Plc , one of only two independent broadcasters in the ITV network, said it may sell its TV franchise, sending its shares up as much as 13.4 percent. The Belfast Telegraph reported on Saturday that UTV was due to sell its television division to ITV Plc in a multi-million-pound deal. (http://bit.ly/1Jesiem) "Discussions are ongoing and may or may not result in such a transaction being agreed," UTV Media said in a statement. An ITV spokesman declined to comment on what he termed as speculation. UTV Media, which launched as Ulster Television in 1958, forecast in June a deeper-than-expected full-year loss at UTV Ireland, its new Republic of Ireland channel, as audience growth stalled. Peel Hunt analyst Alex Degroote said a sale could fetch between 100 million pounds and 125 million pounds ($156 million and $195 million) UTV's television division, which operates in both Northern Ireland and the Republic of Ireland, accounted for 36 percent of its revenue last year, according to Thomson Reuters data. Most of the company's revenue comes from radio. UTV Media warned in June that its channel in the republic faced a loss of 11.5 million pounds, nearly double the 6 million pounds it had forecast in March, and said it had a plan to address the audience shortfall. "UTV is losing a lot of money in its Republic of Ireland TV business. That is putting the Plc balance sheet under a lot of strain. And therefore, we have been thinking for a little while that the company needed a solution to this problem," Degroote said. He added that UTV has a close working relationship with ITV Plc because of shared programming and probably approached the much larger broadcaster. UTV shows ITV programming as an owner of the Channel 3 franchise in Northern Ireland and runs shows such as "Lesser Spotted Ulster". A sale to ITV was expected to be confirmed this week and will mark the first time the TV channel would pass out of local control since it was set up, the Belfast Telegraph said. ITV's shares were down 1.9 percent at 0921 GMT on the London Stock Exchange on Monday, amid a wider selloff that sent the FTSE-100 index <.FTSE> down as much 3 percent. UTV shares were up 9.2 percent. (Editing by Anupama Dwivedi)