Dyke's bid for ITV goes on hold

GREG Dyke's plans to bid for ITV are likely to be delayed until after the broadcaster has renegotiated the cost of its licences in the summer, according to TV sources close to the former BBC director-general.

ITV pays the Government about £200m a year for its broadcast licences. The punishing price is a legacy from the days when it faced little competition for audience share, so was made to pay highly for rights to the lucrative franchises.

The cost of the licences has been under review by regulator Ofcom since the start of the year and is expected to be cut sharply - perhaps by up to half - when negotiations are completed at the end of June.

ITV chief executive Charles Allen has won praise in the past for his negotiating skills with the regulatory authorities. Potential bidders expect him to complete talks to reduce the cost of the licences before they attempt a takeover, sources suggest. They believe he would then be ousted by a new owner.

The licence charges will be a key factor in the price of any offer. ITV has a market value of £5.2bn, though a successful bidder would be likely to have to pay much more.

Dyke, who has been retained as an adviser by venture capitalist Apax, is thought to have been working on takeover plans for a year. These are understood to involve linking up with other private equity firms as well as, potentially, a trade buyer. It was thought that Dyke would make his move within the next few weeks, but sources now say he intends to wait.

ITV, created through the merger of Carlton and Granada in 2003, began trading on the stock market in February last year at 148p a share. The shares fell steadily, but have recovered in recent weeks on strong first-year results, closing at 128¾p on Friday.