Greg Dyke's audacious private equity bid for ITV has been rejected by the company and is now being mulled over by shareholders. The basic idea is to inject £1.3bn into ITV in return for nearly half the shares, with shareholders getting a £3.6bn payout funded by raising the company's debt levels. Investors would also hope to share in the "upside" if Dyke can turn the company around.
It's an unusual plan and one that is intriguing and to some extent beguiling commentators. There is no doubt that ITV has been under pressure in recent years in a world of increasing choice for the viewer, falling advertising revenues and sharper competition from the BBC and Channel 4.
The question is whether it needs a management change to do that, especially given the risk attached to ratcheting up debt. The Independent's Jeremy Warner describes the plan - co-authored by Goldman Sachs, Apax Partners and Blackstone - as "confusing and operationally dangerous". Writing in the Times, Dan Sabbagh points out that servicing ITV's debt could cost as much as £200m a year.
What are the raiders promising that ITV boss Charles Allen isn't doing at the moment? They are reportedly planning to concentrate on "event programming" such as sport and movies, and may sell off the Gray's Inn Road headquarters. Or they could reduce the programme budget by 25%, using more repeats and American imports.
But Charles Allen may have a trick up his sleeve too - he could return £1.5bn to shareholders. Some commentators think that although Dyke's bid might fail, it will galvanise current management into upping their game. The Guardian's City notebook suggests that ITV could go as far as getting rid of Mr Allen to appease its top shareholder, Fidelity.
In the Daily Telegraph, former Channel Five chief executive David Elstein points out that ITV's biggest problem - the contracts rights renewal system that allows advertisers to pay less as audiences decline - cannot be undone by new owners. And he suggests that the step that could generate most value for ITV, demerging its production business, would not require a takeover.
