UTV losses mount as TV3 tees up cash-rich investor
Shares in UTV Media plunged yesterday after the broadcaster issued its second proft warning in as many months on the back of terrible results from its Irish television operation.
And in another blow, it emerged that international media giant Liberty Global is in exclusive talks to buy TV3 - a takeover by the UPC owner would create a new Irish media giant.
In March, UTV Ireland had been expected to lose around £6m (€8.4m) in its first year but in May its parent said losses would top £8.5m.
Yesterday, however, in an unscheduled trading update, UTV said it would now lose £11.5m and as a result the company had renegotiated some of its covenants with its lenders.
In the statement, UTV said audience growth had "stalled in the last month".
As a result, the firm said it was "assuming no significant improvement in overall audience levels for the second half of the year and is therefore revising its guidance for the full year and now expects UTV Ireland to incur losses of £11.5m in 2015".
The higher losses forced broadcaster to agree with its bank lenders for the net debt/EBITDA covenants - a ratio of earnings to loans - on its facilities to be raised from 3.5:1 to 4.5:1 for a period of one year.
Traders were unforgiving, with shares in the company plunging 8.7pc in London.
UTV owns several radio stations in Ireland and the UK but launched its UTV Ireland channel at the start of this year.
The firm was bullish on its chances, and had aimed for it to be the second most watched station in the Republic by 2017. However the station has been struggling since it launched.
In March the company said the TV venture would much more than had been expected after delays in ad agency negotiations. Earlier this month it emerged that its main evening news at 5.30 had an average audience of just 17,500.
Meanwhile John Malone's Liberty Global has entered into exclusive talks to buy TV3, moving a deal one step closer.
Liberty Global, which owns cable supplier UPC in Ireland, is seeking to buy TV3 from its private equity owner Doughty Hanson in a deal expected to be valued in the tens of millions of euro.
If regulators sign off on the purchase it will give Mr Malone's company a foothold in TV production, broadcasting, broadband and phone services in Ireland.
That will create an instant rival to the likes of Eircom, which leads the broadband market, and Sky, which is investing heavily in so-called "triple play" of home phone, broadband and TV services.