Newspaper article The Journal (Newcastle, England)

ITV Pledge on Merger

Newspaper article The Journal (Newcastle, England)

ITV Pledge on Merger

Article excerpt

Byline: By Graeme King

Merger partners Granada and Carlton have pledged to create a "bigger and stronger" ITV after the pair's pounds 4bn tie-up won Government backing yesterday.

The media giants remain on course to join forces in January after Trade & Industry Secretary Patricia Hewitt attached less stringent conditions to the deal than many analysts had been anticipating.

But there is concern that ITV's new strength will not be reflected in the regions which were once the company's backbone.

Former creative head of Granada and leading independent producer Andrea Wonfor said yesterday she would like to see a "regional caveat" in the detail of the merger deal to ensure operations such as Tyne Tees, currently owned by Granada, were not hit by any more budget cuts and were maintained as creative centres, besides just producing news and current affairs.

And the head of support agency Northern Film and Media, Tom Harvey, said it was important that any cost savings went back into programming - particularly regional programmes and network programmes made outside London.

Ms Hewitt said the Granada/Carlton merger, which unites the owners of 12 of the network's 15 regions, would create an enlarged ITV that was more equipped to compete with rivals, including BSkyB and the BBC.

The two companies welcomed the terms yesterday, adding that the end result would be better television for viewers and advertisers. Granada executive chairman Charles Allen said: "Today's announcement brings closer the opportunity for a bigger, stronger ITV to compete on an equal footing with the other UK broadcasters."

Following an inquiry by the Competition Commission, Ms Hewitt said the pair must agree to conditions including "behavioural" remedies that maintain rates for existing advertisers and offer discounts if ratings fall.

An independent adjudicator will oversee the application of the system, while the new ITV must agree to further proposals to safeguard other licensees, including Scottish Media Group - owner of Grampian and STV.

There had been fears that the pair would be forced to sell their sales houses in order to allay worries a merged broadcaster would have too much power. The two companies currently hold around 52pc of the television advertising market.

But selling off the two advertising houses would have cut the estimated pounds 55m annual cost savings from the merger by as much as pounds 20m.

The company has already said job cuts would result from the creation of ITV plc, although it has not specified how many posts would go.

Under the tie-up Granada is likely take a 68pc stake in the new company.

Granada and Carlton will now be given until November 7 to prove to the Office of Fair Trading that a package of measures recommended by the Competition Commission can be implemented.

Shares in Granada and Carlton surged 5pc and 9pc respectively as analysts said the announcement also made the new company a more attractive bid target for foreign companies.

Will ITV turn down the volume in the regions?

The giant ITV network has been in decline for years now, with audiences falling in the face of multi-channel expansion and a resurgent BBC.

A billion pounds was wasted on the failed ITV Digital experiment and niche advertisers took valuable income from the company.

All the while, the two dominant forces in ITV, Carlton and Granada, were buying up the final few regional franchises available to them, leading to the polarised picture of ownership we see now, where just three franchises lie outside their grip.

It was perhaps inevitable that eventually the two companies would merge in the pounds 4bn deal cleared yesterday. This bigger group will unite to fight a bold, commercially savvy BBC and the rampaging BSkyB, which cannily moved early to lead the digital revolution. …

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