STV and ITV Settle Legal Dispute ahead of Court Date

A legal dispute between ITV and STV has been settled ahead of going to court, with STV requiring to pay just under five million pounds.

What ended up as a claim and a counter-claim between the parties has technically been settled at £18 million, but the Glasgow-based broadcaster will be actually paying a relatively modest £4.8 million once various other factors are taken into account.

The first instalment in the dispute was ITV claiming STV owed it £38 million towards the making of network programmes that STV then decided not to broadcast.

The two companies looked further destined to meet in court when STV counter-claimed over alleged withheld sponsorship and advertising money and an issue over 'new media rights'; for instance, who gets what from on-line programme catch-up services. The court date had been speculated as next month.

Says a statement issued by STV's corporate communications advisers, College Hill: “All current and proposed legal actions have ceased with immediate effect and the parties have agreed the basis of a much more collaborative relationship for the future which will avoid a reoccurrence of the issues which resulted in legal action.”

The statement explains the final cash sum boiling down to £4.8 million thus: “The terms of the settlement which totals £18.0 million consists of £7.2 million in cash payable this year and £10.8 million either in programme rights as at December 31 2011 or cash, as adjusted, depending on further discussions with ITV.

“The cash payments will be made in agreed instalments and met from STV’s existing bank facilities and the programming rights payment is capped at a maximum of £15 million. In addition, STV will receive £2.4 million of credit for programme opt outs in 2011 giving a net cash impact of the settlement of £4.8 million. STV expects to book an exceptional charge as a result of this settlement of approx £9.0 million in the H1 2011 results, in addition to the current provisions.”

It continues: “STV believes it to be in its shareholders' best interests to end a long period of uncertainty over the relationship with ITV and ITV Network, to cease all ongoing and proposed litigation and to focus on STV’s core growth strategy as it continues to build on its position as Scotland’s leading commercial digital media company.”

Both the chief executive of STV Group plc and ITV plc are quoted in the statement, Rob Woodward, the chief executive of STV Group plc quoted as saying: “I am pleased that we have reached a wide ranging settlement with ITV and that our two organisations can work collaboratively in future for the benefit of the Channel 3 Network. STV is committed to the Channel 3 Network and we will also continue to pursue our strategy of building on our leading position as Scotland’s digital media company.”

Meanwhile, Adam Crozier is quoted, as saying: “We are very pleased that this long running legal dispute with STV has been settled by way of an £18 million payment to ITV. We look forward to working closely with STV in the future.”

In a separate statement, STV's financial advisers, Peel Hunt, say: “We see this as a highly positive result for STV group. First, it limits the cash impact to £5 million – which will make up part of a £9 million exceptional item this year – well beneath our £20 million worst-case scenario. Second, it draws a line under any further legal actions and enables both ITV and STV Group to move forward with a more collaborative relationship. Third, and most importantly, it removes a key risk to the stock and quantifies the financial costs involved.”