With the impending arrival into Northern Ireland of legal RTE1, RTE2 and TG4 coverage on DTT, wouldn't this make UTV less attractive to ITV as a commercial broadcaster, noting the extension of choice to viewers (and advertisers) in the province?
Personally, I doubt this would have significant impact; RTÉ has been available to Northern viewers via various means since the early 1960s and it's never had a strong effect on UTV's Northern audience share or revenue.
Its staggered increase in penetration hasn't been that key in UTV's TV decline on both sides of the Border - TV3 has always been a greater competitor, before and after its patronage by ITV plc, and its lack of carriage on digital satellite and terrestrial platforms. The increased channel choice generally offered on these platforms has impacted as much as, if not more than, the channels from South of the Border.
It must also be considered that RTÉ/TG4 is still mainly popular with audiences of a Nationalist/Catholic persuasion and hasn't crossed over much to Unionist/Protestant audiences - there remains a perception that it's a "foreign broadcaster".
As far as a large chunk of the population in the South (particularly lovers of rugby union) are concerned, TG4 is a foreign broadcaster...
Anyway there has been some discussion of where UTV goes from here in the business media, particularly the Sundays. The Sunday Times reckons TVC hasn't the money for a bid on its own and will need to partner with someone to do it. That draws the situation where TVC could acquire the company in tandem with ITV plc and immediately sell the TV business to ITV. TVC are primarily a venture capital company (although they seem to have ambitions to do a DCC and transform themselves into an industrial holding company.
The Sunday Independent, on the other hand, reckons the fall out from this will be the placing of TVC's 18% shareholding on the block. There is an Irish Stock Exchange rule that says that if a shareholder buys more than 30% of a company this triggers a mandatory bid for the entire issued share capital so it will be interesting to see what happens there.
TVC's website right now has UTV Media listed as a "key investment" so I'm not sure which way this will go.
As far as TV3 is concerned, I think it has had a huge effect on UTV in the South (not really so much in the North). UTV was once the second channel in the Republic behind RTÉ One. Now its fifth (although as you say, the market has fragmented a lot more, the only channels now that have more than 5% market share are RTÉ One, RTÉ Two, TV3, and BBC One). The thing is that viewers who once watched ITV's top programs on UTV are now watching them on TV3 instead. It would be interesting to see what ITV would do if it acquired UTV. To me there are only two options for it: (1) Pull UTV from cable in Ireland, so that TV3 gains its viewers (2) Directly compete with TV3 for viewership. Now that ITV no longer has an equity stake in TV3 (1) is a lot less attractive, but if it competes with TV3 for viewership, the long term outcome will be the end of TV3's programme supply deal with ITV. Which would be very problematic for TV3, what does it do then, go back to US and Aussie programmes (which it has 3e for anyway).