According to a report in the Financial Times, Time Warner and investor groups Goldman Sachs and Apax Partners will not be staging a bid because the size of the pension deficit would have have increased the total debt the consortium would have to fund.
The news that Time Warner and a consortium of investment banks would be tabling a full takeover of ITV emerged at the beginning of this month. However, reports a week later detailed the consortium's plan to take only a 30% stake.
Following reports of the bid plans, the ITV share price was boosted to around 20% more than its price at the beginning of the year, although today its price was down 3.25p to 122.5p.
Pension fund deficits have impacted on a number of high-profile takeover bids in the last few years, most noteably, when Permira was forced to abandon plans to buy retailer WH Smith as it would have to make up a £250m deficit.
With the UK's new pensions regulator, which came into force in July, all pension fund trustees can demand that its deficits are covered by the new owner in the event of a takeover.
As well as HBO and CNN, Time Warner owns Warner Bros film studios, New Line Cinema, AOL, IPC Media and Time Inc, which publishes more than 140 magazines.
None of the companies would comment on the proposed deal.
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