UTV Ireland may merge with TV3 after mounting losses
UTV Ireland faces a near inevitable merger with rival TV3 after a dismal first six months' trading, according to a leading UK Media Analyst.
Despite a resurgent Irish television advertising market, UTV Ireland recently announced that it expected to lose as much as €16m in its first year, four times what it originally estimated.
Alex DeGroote, Media Analyst at UK Investment Bank Peel Hunt, said that given the situation that UTV Ireland sees itself in, the station is unlikely to survive past its first year. "The solution that we think is plausible is to merge UTV Ireland into TV3, with UTV becoming a minority partner," he said.
Liberty Global, which is the parent company of UPC, purchased TV3 last week in a deal that put the value of the station at €87m. The analyst estimates that the merged company would be worth €120m would make the deal worthwhile for TV3.
DeGroote said that if something is not done about the struggling station soon, it could become a threat to the broader UTV business.
"There is a lot of regard for the management team in UTV. No one argues that exposure to the Irish TV ad market's year-on-year growth is a bad thing, and the decision to enter the Irish market directly was still probably the right one, but the execution has been poor to say the least.
"The problem is that if the losses are allowed continue at this rate, they risk obscuring UTV products which are doing really well," he concluded.
Sunday Indo Business