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Cable giant NTL is reported to be offering £5bn or more in cash and shares for ITV, but according to some reports this looks unlikely to satisfy some ITV investors.

NTL confirmed on Thursday that it was about to enter into preliminary discussions with ITV regarding a possible merger of the two broadcasters and it did warn that there was "no assurance that these discussions will lead to any offer being made" for ITV.

Banks representing the two met on Friday as more details of NTL's bid emerged. It is reported to have lined up Michael Jackson, the former chief executive of Channel 4, to run ITV should it be successful.

Jackson is one name bandied around by analysts and the media as someone in the running to replace Charles Allen. Jackson is currently the programming president of US internet firm InterActive Corporation.

The first major stumbling could be satisfying those investors and the Independent on Sunday reported that shareholders in ITV do not want to swap their stakes in the broadcaster for shares in an enlarged US-listed group.

One institutional shareholder said: "Unless NTL puts cash on the table, it can forget about the takeover."

NTL has said that it will only press ahead with its £5bn bid if ITV gives it the go-ahead, as Steve Burch, the NTL chief executive, seemed to rule out a hostile bid, according to the Sunday Times.

NTL carries a large amount of debt, in excess of £6bn following its mergers with Telewest and Virgin Mobile, and so will be unable to proceed without getting a look at ITV's books, which means no hostile bid.

Shareholders in ITV are worried that swapping their holding in ITV for a holding in NTL will prove poor value. With its high debt and low rate of return, NTL has consistently failed to impress financially.

It is now struggling to hang onto subscribers as it invests heavily to upgrade the old NTL network to the level of the smaller Telewest, which has more digital cable subscribers. It is also struggling to compete with BSkyB and the move on ITV is partly about addressing that issue.

It hopes that ITV's programming will strengthen its position in the market against Sky, despite ITV having its own programming woes.

In March, ITV rejected a 130p bid led by former BBC director general Greg Dyke on behalf of private equity firms including Blackstone, Apax and Goldman Sachs. Financial Mail was reporting that NTL will beat the private equity bid with an offer in excess of £130p a share.

In addition it was reporting that Sir Richard Branson's Virgin group, now the largest single shareholder in NTL with 11%, is backing the deal enthusiastically.

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