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Wednesday, 16 October, 2002, 16:30 GMT 17:30 UK
Granada and Carlton agree merger
Granada/Carlton graphic
The two big independent television companies Granada and Carlton have agreed a 2.6bn ($4bn) merger.


One company, with one management and one focus can now set its sights firmly on beating the opposition

Michael Green, chairman Carlton
Under the terms of the deal, thrashed out last week, Granada will own just over two thirds of the combined business.

Granada's boss Charles Allen will become chief executive of the new company.

And Carlton's founder Michael Green will become chairman.

Satisfying the advertisers

"One ITV has been a vision long in the making," said Mr Green.

"One company, with one management and one focus can now set its sights firmly on beating the opposition and giving viewers and advertisers what they want."

When Granada and Carlton announced last week that they were in advanced merger talks, advertisers said they were worried that the new company would be able to force up prices for TV airtime.

But Charles Allen said the group was ready to make concessions on airtime sales to appease its major advertisers and the regulators who will scrutinise the deal.

He said he was "comfortable" the combined broadcasting, distribution and production operations would stand up to scrutiny by the competition authorities and Independent Television Commission.

But he admitted the same would not be true for the advertising arm, which has 55% market share.

To get over any competition problems, Granada and Carlton are proposing that their respective airtime sales operations be run separately, until the Competition Commission makes a ruling.

One ITV - for England and Wales only?

Currently out of the merger picture is Scottish Media Group (SMG), which holds the two Scottish ITV franchises.

SMG pointedly said on Wednesday that it supported the idea of a single ITV company in England and Wales, but was confident to hold on to its two franchises.

The chief executive of SMG Television, Donald Emslie, told BBC Reporting Scotland: "Whatever is good for ITV is good for Scottish and Grampian. We can sit very comfortably with a consolidated Carlton and Granada."

SMG grew out of Scottish Television, which has held the ITV franchise for Central Scotland since 1957. Five years ago it merged with Grampian Television.

But the group is heavily indebted, and Granada reportedly approached SMG over the summer to see whether the Scottish franchises were up for sale.

Saving 55m a year

Channel 4, which is reported to be considering sweeping staff cuts, is also opposed to the merger because it would create too big a rival.

Granada and Carlton have suffered from a downturn in advertising revenue during the economic slowdown, and their television ratings have been under pressure.

The two broadcasters' finances have also been hit by the costs of propping up their loss-making digital terrestrial service ITV Digital, which collapsed in May this year.

The companies said the merger would eventually lead to savings of 55m a year.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Russel Hayes
"Granada and Carlton have finally agreed the terms on which they can come together"
Former secretary of state for the DCMS, Chris Smith
"On the whole it's probably a good step"
The BBC's Torin Douglas
"They certainly want to do it but it's not going to happen straight away"

Key stories

Background
See also:

11 Oct 02 | Business
11 Oct 02 | Business
04 Sep 02 | Business
19 Aug 02 | Business
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