Predators poised for £6.6bn ITV bid

AMERICAN media giant Time Warner and investment bank Goldman Sachs emerged this weekend as key members of a consortium stalking ITV. With venture capital group Apax, they are weighing up a bid worth £6.6bn.

The trio have been looking at ITV for a year, according to City sources, and are considering a bid of 165p a share against last week's closing price of 124¾p.

Greg Dyke, the former directorgeneral of the BBC who quit in the wake of the Hutton Inquiry, is an adviser to Apax and is believed to be keen to lead any bid by the consortium for ITV.

Before joining the BBC, he ran the ITV franchise London Weekend Television, which was acquired in 1994 after an acrimonious battle by Granada, then led by ITV's current chief executive Charles Allen. Neither Dyke nor any of the companies involved would comment.

There is also debate within the consortium about Dyke's role. His relationship with the Government following the Hutton Inquiry is considered by some to be tainted.

ITV would need a good relationship to negotiate a reduction in its public service broadcasting requirements, which could bring annual savings of £50m by 2008.

Allen scored a triumph last week when regulator Ofcom announced that it had decided to cut the amount ITV pays for its broadcasting licences by £135m to £85m this year, falling to zero by the time the analogue signal is switched off in 2012.

The reduction in licence payments is significant as potential bidders can now include these savings in their calculations.

Though ITV's share price rose on the back of Ofcom's announcement, it is still considerably less than when it debuted on the stock market in February last year at 148p. ITV has a pension deficit of about £500m, which would be an issue for any prospective buyer.

New laws make it possible for pension trustees to block the sale of a business if they fear that pensions could be in jeopardy.

However, the involvement of a trade buyer such as Time Warner, with operations ranging from internet provider AOL to Warner Brothers film studios, would almost certainly calm any fears.

Separately, ITV is believed to have held talks with the BBC about joining it for the possible launch of Freesat, the free satellite television service.

ITV is awaiting regulator Ofcom's ruling on its dispute with pay-television provider BSkyB over the £17m annual fee it pays to have its channels aired on the digital network.