The battle for consolidation within the UK television industry reached its final round this morning when Carlton and United abandoned their plans to merge. The stage is now set for Granada Media to step in and create a duopoly within ITV.
Stephen Byers’ condition that United sell its Meridian licence, which serves the south and south-east of England, was the stumbling block to completion of the deal between United and Carlton. In a statement released today the groups said that such criteria “undermines the strategic rationale behind the merger and significantly reduces the benefits to shareholders of combining Carlton and United’s businesses.”
Shortly after the statement was released a further statement followed from United reiterating its interest in further deals. It said “it remains clear to the board that there is significant value to be generated from the consolidation of UK television ownership,” and said it was in talks with “interested parties” about selling off some its ITV franchises. Reports say that Carlton is “talking with everyone”.
All eyes are now on Granada Media, which is free to make its move on either of its rivals. Its plans to bid for either Carlton or United were cleared without conditions by the DTI last week and both groups are now expected to pursue their talks with Granada.
Rumours that the proposed deal between United and Carlton, which kick-started the consolidation battle last year, could fall through, emerged earlier this week when Carlton was believed to be considering dropping out. The group, headed by Michael Green, said that the value of the deal would be drastically reduced on divestment of Meridian (see Carlton Considers Dropping Out As Countdown To Two-Way ITV Merger Begins).
The DTI imposed the divestment condition to prevent one ITV company owning more than two of the biggest franchises in revenue terms – LWT, Meridian, Carlton TV and Central. In its ruling last week it opened up the way to further consolidation within ITV by dropping the 25% limit on advertising revenue which one group can own but said that the largest franchises must be divided equally between the groups in order to create two balanced ITV companies (see ITV Merger Ruling Abolishes 25% Advertising Revenue Limit).
Current trading shows Carlton falling behind its rival; prices slipped 11p to 809p while United shares have put on 24p to 968p. Granada Media, meanwhile, fell back 24p to 584p.
Carlton Communications: 020 7663 6363 United News & Media: 020 7921 5000 Granada Media: 020 7620 1620
