The quest by ITV sunrise station TV-am to find a new core business when its broadcasting franchise expires at the end of this year appears to have failed.
The company took the first step towards winding itself down Tuesday when it announced it would return most of its cash reserves to shareholders by the end of the month, via a 40 pence per share dividend.
TV-am was hoping to use its considerable cash pile to move into a new media business, and has been scouting for investment opportunities since it lost its ITV breakfast franchise in last year’s auction. But the announcement of the dividend payment signals that the company has been unable to find any attractive deals.
It considered plans to bid for the new Channel 5 license, and subsequently explored the possibility of acquiring a couple of radio groups, or making a bid for HTV, the troubled ITV station.
All these projects came to naught.
No ‘final decision’
“We have not found anything suitable to keep the shareholders’ money for,” said public affairs controller David Keighley. But the company has not yet announced total surrender. “We have made no final decision about our future,” Keighley insisted.
The dividend will return T26.7 million ($ 40 million) to TV-am’s shareholders , but this still leaves it with T10 million ($ 15 million) in cash, plus this year’s profits from its breakfast TV franchise, which are expected to reach T27 million ($ 40.5 million), pre-tax.
$ 22.5 mil left
Analysts estimate that, after all the costs of closing down the broadcasting operation, TV-am will be left with T15 million ($ 22.5 million) to spend on any investment opportunities that come along at the last minute.
But the most likely outcome is still that the company will wind itself down completely during 1993, analysts say. “It reflects well on TV-am’s management that they have made this decision,” said Guy Lamming of stockbroker James Capel. “None of the new businesses they looked at would have been the right thing for the shareholders.”