SMG yesterday promised to engage independent experts to prove that ITV has underestimated the value of its regional franchises by as much as £50 million.
Rob Woodward, the chief executive of SMG, said that ITV's claim – contained in its recent interim results, that it received a benefit worth £25m from its three regional franchises, STV, UTV and Channel – was "erroneous", and the company would set out
to prove it.
SMG said it believed the franchises had a value of "in excess of £75m" because of factors such as the contribution to programme development and the ability they give ITV to promote itself to advertisers as a platform covering all of Great Britain.
"(We] believe it should be clearly understood that, in the case of STV at least, ITV derives significant benefits from our custom and direct financial support," SMG said in a statement.
Woodward said the company was not seeking money from ITV from the exercise but the "recognition" of its contribution could impact on future negotiations with television regulators or ITV itself.
The argument came as Woodward declared the company was "operationally lean" after a major restructure to focus on Scottish television, culminating in the £53.2 million sale of Virgin Radio in June.
Glasgow-based SMG reported a £1m rise in operating profits to £4.9m in the six months to 30 June, with revenue from continuing operations flat at £56m. A restructuring and a cash call cut net debt from £189.4m to £15.1m at the end of June.
Woodward said while the advertising market was becoming increasingly difficult the company remained on track to take a 21 per cent share of the Scottish TV advertising market by the end of 2008.
"Clearly the economic environment is significantly more challenging in 2008 but we are on track to outperform the market for the full year, especially in the regional advertising market," Woodward said.
He said the company was "operationally lean, commercially focused and creatively successful".
The full article contains 340 words and appears in The Scotsman newspaper.
