It would be the second time that Ulster, which owns UTV and a string of radio stations in the UK and Ireland, has considered a bid for SMG.
According to reports, Ulster chief executive John McCann is closely watching SMG's share price.
Two years ago in March 2004, Ulster considered a £400m venture capital-backed bid to buy SMG, which also owns cinema advertising firm Pearl & Dean.
The situation is much changed. Then SMG rejected McCann's offer, but then its share price was trading at 120p and today it is stands at 74p after a turbulent week at the firm.
ITV would have been expected to oppose the merger in 2004, but with problems of his own, ITV chief executive Charles Allen could stand back and let it go ahead without using the group's 17% holding to oppose the deal.
Last week's departure of SMG chief executive Andrew Flanagan showed the group's management at odds with several shareholders over the strategic direction of the company and its search for a successor.
Shareholders were behind forcing Flanagan to be removed, believing that he had failed to boost the worth of SMG and has instead seen more than 50p wiped off the value of an SMG share, a decline of more than 40%.
The merger of Ulster, which also owns TalkSport, and SMG would create a regional ITV force combining three franchises and offering a better negotiating position alongside ITV plc, created out of the £5.8bn merger of Carlton and Granada. It would leave only one independent franchise remaining: Channel TV, which serves the Guernsey and Jersey Channel Islands.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum.