Carlton slaps down Granada

Carlton and Granada, two of the major shareholders in the UK commercial broadcaster ITV, are at loggerheads.

Gerry Murphy, chief executive of Carlton Communications dismissed comments made by Granada boss as "hysterical scaremongering".

In a leaked letter to Tony Blair, Granada chief executive Charles Allen had warned that his company was vulnerable to takeover approaches from foreign companies, and that the digital terrestrial channel OnDigital could be forced to close because of the delay to legislation lifting cross-media ownership restrictions.

Carlton is reported to have issued a point-by-point rebuttal of Mr Allen's letter, casting doubt over a future merger between the two media groups.

The two ITV companies, and their OnDigital joint venture, have been hard hit by the slump in advertising.

Resisting a merger

Carlton said that a merger with Granada was neither inevitable nor necessary and stressed that it was possible to continue in partnership.

Analysts say that Granada favours a merger in order to share rising costs because of the downturn in advertising.

But Carlton is thought to object to the idea since it is the much smaller partner and does not want to be swallowed up.

News of the escalating row comes the day after a leading media forecaster said that ITV will this year suffer its worst slump in advertising since the start of commercial television 50 years ago.

One of the reasons behind the slump is the cutback in global ad spending by US multinationals in the face of economic slowdown.