Market Backs Carlton As Most Likely Target For Granada

Carlton is emerging as the most likely target for a takeover bid by Granada. Shares in the group rose rapidly as news of Granada’s formal submission to the OFT (see Granada Poised To Bid For Rivals) affected prices.

This morning Granada sent a letter to the Stock Exchange confirming its interest in acquiring one of the two groups. The group’s reason for entering the bidding war for ITV franchises was stated as its long interest in consolidation within the network. “Granada has long advocated consolidation of ITV in a responsible manner and has every intention of remaining a key player in this sector. Consolidation obviously raises a range of regulatory issues for the OFT, the ITC, the participants, their suppliers and their customers. Granada welcomes the regulatory review that this will engender and looks forward to participating in the debate,” a statement from the company said.

Latest Stock Exchange figures see Carlton up 13p at 570p and United slipping 7˝p to 790˝p. Although Carlton was emerging as the stronger candidate in the eyes of the market, Granada’s chief executive Charles Allen refused to be drawn on his group’s preferred choice. “Obviously we’re interested to look at how the share prices move today. But the reality of deciding which one we will bid for is a bit futile at the moment”, he is reported to have said.

Analysts were speculating today on the possible outcome of this latest development. Many believe Carlton to be the least likely option as, under current rules, Granada would have to dispose of one of the two London franchises, LWT or Carlton Television, in order to make a takeover bid for the group. Under current broadcasting regulations one company cannot control more than a 25% share of advertising revenue or a 15% share of audience. In terms of franchise ownership this would mean that a Granada-United merger would require the disposal of United’s Anglia and HTV franchises; a Granada-Carlton merger, however, would mean the disposal of Carlton’s London weekday franchise, which is a stronger asset.

Allen has already held discussions with culture secretary Chris Smith, the OFT and the ITC and is calling for a review to the entire current procedure with a view to a single ITV network in the next few years.

Granada Group: 020 7620 1620 United News & Media: 020 7921 5000 Carlton Communications: 020 76636363