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Pauline McCole reports for BBC News
"What it wants is the dominant share"
 real 28k

Chief Executive of the Granada Group Charles Allen
"We're not trying to pre-empt the regulator"
 real 28k

Friday, 7 January, 2000, 11:59 GMT
Granada to bid for rivals

Calls for consolidation of independent television sector

UK media and leisure group Granada is making a formal submission to the Office of Fair Trading for consent to buy one of its main rivals, Carlton Communications or United News & Media.

In November, Carlton and United announced that they planned to merge, threatening Granada's position of strength in the independent television sector.

Acquisition would make Granada top independent television company

Ever since that announcement, a tactical response from Granada has been expected. But any takeover by Granada would need approval from the competition authorities, as it would transgress existing rules.

Since 1994, UK regulations have limited the ITV companies to a maximum share of net advertising revenue of 25% and no more than 15% of the total television audience.

Key player

Granada says it has long advocated consolidation of ITV in a responsible manner and that it has "every intention of remaining a key player in this sector".

The group said it would make a final decision over a bid for Carlton or United when the outcome of the regulatory review of its request was known.

There is no doubt that given the right regulatory environment we will be bidding for one of these companies
Gerry Robinson
Granada chairman

Granada chief executive Charles Allen called for the Competition Commission to start a wide-ranging inquiry into consolidation in the UK independent television sector.

Rival broadcasters have already called for a probe by the OFT into the Carlton-United merger plans. Such a probe could end in a referral of the merger to the Competition Commission.

Expansion blocked

Mr Allen says he wants a much more comprehensive inquiry, which would examine the tight restrictions on audience size and advertising market share that govern mergers between TV companies.

These rules mean that the Carlton-United combination would have to make some disposals, but they also block any bid by Granada for either of its rivals, as the resulting company would be simply too powerful.

Mr Allen said: "Granada has always been at the heart of ITV, and as the network consolidates further we're asking the OFT and the Independent Television Commission to let us bid for either United or Carlton.

"We believe that further ITV consolidation raises a number of competition and public policy issues that should be referred to the Competition Commission."


One market analyst said: "Granada does not want to stand by and watch these two companies get together - ITV is too important to it."

Granada chairman Gerry Robinson said both companies were appetising: "There is no doubt at all that given the right regulatory environment we will be bidding for one of these companies.

"They both represent good opportunities for different reasons," he said.

A Granada tie-up with either of the pair would see off what he described as the "north-south divide" of ITV which would be created by a United-Carlton combination.

He said United-Carlton would be too powerful in the south, while Granada would end up dominating the north.

Pre-emptive strike

Granada is thought to have made its move earlier than expected because next week sees an early closing date for shareholders to accept the United-Carlton deal.

There was an outside chance that shareholders owning 50% or more of Carlton might have accepted the deal, meaning United could have declared its offer unconditional.

Referring to his company's plans to acquire either Carlton or United, Mr Allen said: "Granada's track record in TV management and quality programme production mean that either merger would provide an ideal outcome for both ITV and its viewers.

"Obviously it makes sense for shareholders in Carlton and United to wait before taking any further action."

Carlton, valued on the stock market at about 3.5bn, has been seen as the most likely takeover prospect for Granada, and shares in Carlton jumped 7 pence to 564p in early trading.

United shares lost 8p to 790p, valuing the group at about 4bn. Granada Group, capitalised at nearly 11bn, gained 5.5p to 587p.

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