08/10/2003

The UK government has given the go-ahead for the £4.5bn merger of Granada and Carlton TV, creating a single ITV (independent television) network.

The historical deal in British commercial broadcasting, announced yesterday, gives birth to a giant ITV group, controlling 12 of the network’s 15 regional companies, which will compete more effectively with the BBC and Rupert Murdoch’s satellite TV service, BSkyB.
Under the proposed tie-up to be completed by January 2004, the new commercial broadcaster will be named ITV plc and will be chaired by Michael Green, who’s currently the Chairman of Carlton, with Charles Allen, his Granada counterpart acting as Chief Executive. Granada, which owns seven ITV franchises including Granada TV, London Weekend TV and Yorkshire TV, will take a 68% stake in ITV plc, while Carlton Television, owner of five franchises will own the remaining 32%.
The merged ITV will control more than 50% of the commercial TV advertising market, a dominant position in the UK which was denounced by rival broadcasters and led to a lengthy investigation by the Competition Commission. Although acknowledging some “adverse effects” resulting from the merger, the Trade and Industry Secretary, Patricia Hewitt decided to clear the deal on the condition that Granada and Carlton would introduce safeguards for advertisers and other ITV licensees. The proposals include a system of contract rights renewals, which would limit ITV plc’s ability to raise the price of advertising slots.
Commenting on the deal, Carlton TV’s Charles Allen promised better quality TV for British viewers and said that the new ITV will have “one vision, one strategy and one management”.
Speculators have already established that the new mega ITV will be a perfect prey for foreign predators, such as US group Viacom, as the UK government is on the verge of relaxing rules on overseas ownership of UK broadcasters.