Agreement will see STV settle remaining £10.8m settlement with ITV through cash and programming agreement
STV has announced a new licensing deal with ITV in which STV will become an affiliate of the Channel 3 network.
The agreement, subject to approval by broadcasting watchdog Ofcom, would see STV settle its remaining £10.8 million settlement with ITV through programming and cash within an 18-month period.
Last month, STV posted a £900,000 loss for the 2011 year resulting from £13.4 million in exceptional charges.
The bulk of those charges arose from its agreement to pay ITV an £18 million settlement last year after a long running legal dispute.
That dispute, which began in 2009, saw ITV sue STV – the licence holder of the Channel 3 network – to recover up to £20 million of unpaid network budget contributions from STV.
STV then counter-sued ITV for £35 million in unpaid advertising income and a further claim of £12 million for damages for what it called 'exploitation of video-on-demand rights'.
Both parties agreed a settlement last year in which STV was awarded a £2.4 million credit for 2011 programme opt outs.
STV agreed to pay £7.2 million in cash to ITV as part of that agreement, and said it would pay the £10.8 million balance in 18 equal monthly instalments from January 2012 to June 2013.
At the conclusion of the legal action, ITV and STV issued a joint statement in which they agreed the basis of a “more collaborative relationship for the future” to avoid future recurrence of legal issues.
Both parties had agreed last year the £10.8 million balance of the settlement was subject to “further discussion".
The new licensing agreement with ITV would see STV pay the settlement balance of £10.8 million within the 18-month period through both programming and cash.
STV chief executive Rob Woodward said: "Today's announcement confirms the stability and certainty of long term, commercially sustainable networking arrangements between the Channel 3 licence holders.
“STV remains 100 per cent committed to its public service broadcasting credentials, to delivering a distinct schedule for Scotland and to providing a platform for informed debate.
“We are delighted to have reached agreement on a set of terms which will benefit our viewers and consumers across all distribution platforms."
Adam Crozier, chief executive of ITV, added: "We look forward to continuing our positive relationship with STV under a new affiliate agreement.
“This agreement, which is still subject to regulatory approval, represents a major milestone for us as it consolidates and simplifies the ITV Network."
STV has also announced today it has agreed to renew a network affiliation with Northern Irish broadcaster UTV Media, which would allow it to carry the Channel 3 network as well as have access to ITV 1 programming on its online streaming platform in Northern Ireland until 2014.
This deal is also subject to regulatory approval by Ofcom.