ITV shares surge on bid rumours

SHARES in ITV posted further gains today after reports that former BBC director-general Greg Dyke may launch a £6bn takeover bid for the company. ITV shares are now 10% ahead in less than a week amid growing speculation of a bid and were up 3.5p to 118.5p in early trading.

Reports claim that media heavyweights Dyke, Lord Hollick and Stephen Grabiner, the former managing director of the Daily Telegraph, could join forces in a consortium backed by investment groups Kohlberg Kravis Roberts (KKR) and Apax Partners.

Dyke, who resigned from the BBC last year following the Hutton report into the death of the Government scientist Dr David Kelly, and Grabiner are advising Apax, while Lord Hollick was recently appointed to advise US-based KKR. Discussions, however, are believed to be at only a preliminary stage.

The commercial broadcaster, created last year from the merger of Carlton Communications and Granada, recently saw half-year profits rise 42% after advertising revenues hit their best level since the dotcom boom.

Lord Hollick, who used to own the Anglia and Meridian ITV franchises before selling them to Granada, said that buying the group back 'would have a nice ring to it' and that he would not rule anything out.

Analysts, meanwhile, remain cautious about prospects for a bid. Jeremy Batstone, analyst at stockbroker Charles Stanley, said he thought a bid for ITV was a 'distinct possibility' although there may be a question mark over the price. He said: 'There is little doubt that ITV's future as an independent company has been viewed with raised eyebrows.'

Chief executive Charles Allen said at the time of the group's interim results in September that the firm had delivered on all aspects of the merger, with its £100m cost-saving target achieved six months early. The long-awaited tie-up between Carlton and Granada brought together all the former ITV regional companies, except Scottish, Grampian and Ulster.