The UTV offer, which SMG confirmed on Friday, would combine the £175m-valued UTV with the £221m-valued SMG and give each company's shareholders 50% of the new entity.
It would combine assets such as UTV's Ulster Television and TalkSport radio with SMG's Scottish Television and Grampian Television, Virgin Radio, cinema advertising business Pearl & Dean and outdoor advertising business Primesight.
However, weekend press reports suggest the Virgin Radio owner believes the 50:50 nature of the deal is stacked in favour of UTV shareholders and will reject the offer.
Meanwhile, a £280m counter bid for SMG is understood to be in the offing by Rob Woodward, a former Channel 4 commercial director linked with the company.
Woodward was previously interested in succeeding the recently ousted chief executive Andrew Flanagan, but after UTV's approach he is now believed to be in talks with private equity backers about bidding for ownership of the company.
This could lead to the break-up of SMG's television and radio business from its outdoor and cinema advertising divisions.
UTV, under chief executive John McCann, may raise its bid to win over SMG. It has already indicated in its offer that it would be happy to be taken over by SMG in an alternative deal giving SMG shareholders 55% of the new company and UTV shareholders 45%.
There are doubts as to whether UTV has the financial firepower to match Woodward if he succeeds in putting together his £280m offer. UTV had debts of £120m at the end of its 2005 financial year, following its £98.2m acquisition of TalkSport owner The Wireless Group.
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