Analysis: UTV's merger proposal to Scottish Media Group (SMG) is the latest round in an on-again off-again romance.

Although these days it is mainly Ulster wooing a decidedly coy SMG, the Scottish company did build up an 18 per cent stake in UTV during the 1990s, and subsequently disposed of it.

Two years ago, it emerged that Ulster was preparing to bid for SMG. However, a sharp climb in the Scottish group's share price put paid to this. Nonetheless, UTV chief executive John McCann has made no secret of his expansionary ambitions.

SMG's share price is now going the other way. It lost close to 25 per cent of its value since June. Although it added over 2 pence to close at 72.22 pence in London last night, it is still 20 pence shy of the levels at which it was trading before the current decline set in.

In addition, its last chief executive, Andrew Flanagan, resigned in July under pressure from shareholders, miffed at the decline in the value of their equities. So at one level, SMG is looking vulnerable. However, it is not going to swoon into the arms of its Irish sometimes suitor as easily as all that.

Despite the fall in its share price, SMG is still worth considerably more than UTV, around €70 million more to be exact. Analysts warned yesterday that a straight 50-50 merger of the kind that Scottish's press statement said was on the table, could potentially undervalue the company.

Obviously, that's not going to wash with shareholders who have lost around 25 per cent of the value of their stake over the last six weeks or so.

But UTV's statement said there was no certainty regarding the final shape that any potential merger might take. In fact, it made it very clear that it could take any shape at all - so clearly, the Irish company is prepared to consider a number of options.

So there's a possibility that it could pull something off. And some City of London analysts think a deal is possible. Bridgewell Securities' Patrick Yau suggested yesterday that "cost savings and the quest for scale could persuade shareholders to back the merger". Those savings and that scale are the main reasons for the proposed merger, according to Paul Moran, managing director of advertising agency, Mediaworks, part of Owens DDB.

Any deal between UTV and SMG has to get through the board, shareholders and regulators. Right now it looks like they're going to take wooing.