Events at UTV Media serve to highlight the difficulties faced by local companies trying to grow their businesses.

For many years UTV achieved steady growth in an essentially small domestic market. Expansion into local radio, the Republic and then multimedia increased the growth potential.

Most of this growth has been financed through acquisition and as a consequence UTV’s gearing rose sharply.

In a low interest rate, easy credit world this strategy made sense but in today’s turbulent financial markets, lenders, not borrowers are calling the shots.

With debts of £150m compared with revenues of £115m, UTV’s financiers called for an injection of new capital.

A rights issue aimed at raising £50m was announced in June and coincided with several other much larger calls upon shareholders (RBS, HBOS etc).

Despite a fairly heavy discounting of the new shares not all of UTV’s shareholders took up their rights.

This outcome further underlines the market’s current aversion to media stocks.

TVC Holdings takes a different view of UTV.

It has now become UTV’s largest shareholder with 15% of its stock and it believes that it has been undervalued by the market.

UTV’s core TV business has been suffering from lower advertising revenues while its radio business has been performing well.

TVC considers UTV a well-managed business. The economic slowdown will surely put this view to the test over the coming months.

Michael Smyth is senior|lecturer in economics at the University of Ulster