ITV plans to use subsidiary as contingent asset
UK - ITV, the UK commercial television station, has revealed it is in discussions with the trustees of its £2.15bn (€2.29bn) defined benefit (DB) scheme to use the assets of its wholly owned subsidiary SDN Limited to help plug the growing pension deficit.
The announcement follows the end of a two-month consultation on changes to the DB scheme.
The pension fund reported a £646m actuarial deficit at the end of 2008 and a £538m accounting deficit at the end of June 2009. (See earlier IPE article: ITV could have cut pensions deficit by £100m)
ITV has now announced it is in discussions with trustees of the scheme about a partnership agreement, in which SDN Limited - a UK digital terrestrial television (DTT) multiplex operator - would provide "asset backing to the pension scheme".
The broadcaster claimed the agreement would "reduce the pension deficit on a funding basis", although it is unclear exactly how much of a reduction the scheme - which had assets of £2.15bn at the end of 2008 - would see.
ITV has planned to sell the subsidiary, however, it now claims using SDN to back the pension fund "offers greater potential value for shareholders", as it said SDN continues to trade in line with expectations and full year revenues are expected to exceed £40m.
John Cresswell, chief operating officer of ITV, said the discussions with trustees on the use of SDN would help the company to "proactively manage our pension deficit over the long-term".
Cresswell, who earlier this week was named interim chief executive, added: "Seeking to deploy SDN as asset backing to the pension scheme will help us manage our pension risk, while continuing to benefit from the strong cashflows that business delivers."
ITV is meanwhile reviewing the responses to its pension consultation on proposed changes which included a cap on increases to pensionable salary at 1% and offering existing pensioners the option of giving up non-statutory pension increases in return for a one-off "uplift". (See earlier IPE article: ITV consults on DB changes as deficit predicted to worsen)
Following the closure of the consultation on 25 September, ITV stated it would "consider all the feedback before finalising the changes to the scheme." Detailed information on the results is expected to be issued to members within six weeks of the consultation closing.
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