* STV to pay 18 mln stg to end dispute
* STV says in shareholder interest to end standoff
* STV shares up 10.6 pct, ITV down 2 pct
(Adds reaction, share prices)
LONDON, April 27 ITV (ITV.L), Britain's biggest
free-to-air commercial broadcaster, has settled a long-running
legal dispute with its Scottish network partner, lifting a huge
cloud from STV's (STVG.L) outlook.
STV will pay ITV 18 million pounds ($29.63 million), less
than analysts were expecting. The settlement also boosts the
chances of STV resuming a dividend, sending its share price up
10.6 percent on Wednesday.
Relations between the two broadcasters soured in 2009 after
STV opted out of some ITV programmes to show homemade shows
ITV said then it would start legal proceedings to recover
what it described as a 38 million pound ($62.56 million)
shortfall in network programme contributions. STV said at the
time the claim was completely without merit and launched its own
On Wednesday the two sides said they had agreed to settle
The 18 million pounds consists of a 7.2 million pound cash
payment payable this year and 10.8 million pounds either in
programme rights at the end of the year or cash, as adjusted,
depending on further discussions with ITV.
STV will also receive 2.4 million pounds of credit for
programme opt outs in 2011, giving a net cash impact of the
settlement of just under 5 million pounds which was much better
than many analysts had expected.
In total, STV said it expected to book an exceptional charge
as a result of the settlement of approximately 9 million pounds
in the 2011 first half results, in addition to current
"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 Chief
Executive Rob Woodward said.
STV had said it would not pay a dividend while the issue was
Numis analysts said the better than expected cash impact
resulted in a 15 million pound uplift in its valuation, taking
the target price to 171 pence from 131 pence.
"We believe that resolution of the long-running dispute is
in the best interests of both parties and in our view the
settlement is attractive for both ITV and STV," they said.
Shares in ITV were down 1.5 percent in early morning
(Reporting by Kate Holton; Editing by Paul Sandle and Erica