27th Apr 2005 16:23
ITV PLC27 April 2005 27 April 2005 ITV plc acquires SDN Limited ITV plc announced today that it has acquired SDN Limited (SDN) from UnitedBusiness Media plc (UBM) and S4C Digital Media Limited (S4C). The cost of theacquisition is £134 million in cash payable on completion. There is also adeferred contingent consideration of up to £15 million dependent upon theoutcome of Ofcom's ruling relating to the pricing of the five channels licensedto Channel 5 from SDN expected in the next few months. SDN, a UK digital terrestrial television (DTT) multiplex operator, holds alicence from Ofcom to broadcast channels over specified bandwidths on MultiplexA, one of the six multiplexes on the DTT platform that is principally used byFreeview channels. Charles Allen, CEO of ITV plc said: "This acquisition is another step in ITV's strategic development and positionsit well for future growth. Initially, ITV will benefit from a new source ofrevenue but, critically, this ensures that ITV has the opportunity for futurecapacity on the digital platform where its highly successful family of channelsperforms best." Multiplex A presently broadcasts 10 channels and existing customers includeChannel 5, Disney, QVC and Teletext. This acquisition is expected to be earnings enhancing to ITV plc from day one.The acquisition of SDN gives ITV access to a new source of revenue from thechannels occupying the multiplex, which is expected to grow in line withFreeview. It also offers ITV potential for additional broadcast capacity from2010 and technological advances may allow an extra channel to be added toMultiplex A in 2007. ITV presently has five channels on Freeview - four on Multiplex 2 and the fifthon Multiplex D, recently acquired through an auction process conducted by CrownCastle. Transmission, distribution and other services required by SDN to operate underits licence are provided by ntl. Ntl is also the current technology partner forthe multiplex ITV shares with Channel 4 (Multiplex 2). "We look forward to working more closely with ntl across the two multiplexes",added Charles Allen. Notes to editors In January 2005, a consortium led by Macquarie Communications InfrastructureGroup acquired ntl Broadcast which had a 33% shareholding in SDN. Under theprovisions of the SDN Shareholders' Agreement and Articles of Association, theother two shareholders, UBM and S4C, had the right to purchase ntl Broadcast'sshareholding upon change of control. UBM and S4C subsequently entered into adefinitive agreement with ITV to sell these shares for £134 million, subject toadjustments to reflect SDN's working capital balances. SDN Limited SDN Limited holds the licence to operate Multiplex A (Mux A), one of the six DTTmultiplexes. Mux A currently transmits 10 channels: 1. five 2. QVC/S4C 3. UKTV Gold*/Boomerang* 4. Bid TV/S4C2 5. Price-Drop TV/Screenshop 6. TCM/ABC1 7. Discovery*/Discovery H&L* 8. Teletext Holidays 9. UKTV Style*/ Cartoon Network* 10. xtraview* SDN contracts directly with the non-asterisked channel customers above and viaChannel 5 for the others. For most of its direct customers - which are shopping/transaction based operations - SDN earns a fixed minimum revenue guarantee,which is inflation-linked, and a variable revenue stream based on a percentageof net revenues earned by the channels from transactions with DTT customers.These variable revenues are forecast to experience significant growth, driven byrapid increase in DTT platform penetration and an increase in average spend perhousehold. Most of the existing customer contracts run until the end of the current licenceperiod (15 November 2010). FOR FURTHER INFORMATION PLEASE CONTACT: Media ITV Brigitte Trafford 020 7737 8719 Ruth Settle 020 7843 8225 Citigate Dewe Rogerson Simon Rigby 020 7638 9571 Anthony Kennaway Analysts Georgina Blackburn 020 7620 1620 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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