Granada Chief May Accept Divestment To Save ITV Merger
Granada chairman, Charles Allen, has conceded that he could accept the double divestment of ITV’s sales houses to save the broadcaster’s £4 billion merger with Carlton.
Allen has been fiercely opposed to the idea that Carlton and Granada might be forced to sell-off their sales house in an attempt to calm fears over a single ITV distorting the market for airtime sales (see Advertisers Welcome Delay On ITV Merger Judgement).
However, writing in today’s Times he said: “If the Government requires divestment of both sales houses we will have to look very carefully to see if we can make that work.”
Allen remains insistent that double divestment would “significantly undermine the rationale” of the entire deal, which has been under the scrutiny of the Competition Commission for the last six months.
The spinning-off of Carlton and Granada’s sales houses is just one of a number of possible remedies that could be imposed by Trade and Industry Secretary, Patricia Hewitt, when she announces the Government’s ruling on the merger early next month (see NewsLine).
Other potential solutions include a ban on share deals, which see advertisers agreeing to commit a proportion of their budget to ITV in return for air-time discounts, or the requirement that a percentage of ITV’s airtime budget be auctioned off to a third party (see Competition Commission Delays Verdict On ITV Merger).
Allen emphasised there was “no turning back” on the benefits that could be achieved through closer collaboration between Carlton and Granada. He said: “Whatever colour the Department of Trade and Industry gives the merger – red, amber, or green – the future for us will be to build ITV.”
Earlier this year Carlton chairman, Michael Green, reportedly threatened to call off the proposed merger with Granada if the two are forced to sell their advertising sales houses (see Carlton Boss Threatens To Halt Planned ITV Merger).
However, former head of Channel Five, David Elstein, argues that the benefits of the merger do not depend on the savings generated by combining Carlton and Granada’s sales houses. He claims: “The bogeyman of double divestment has been greatly exaggerated” (see ITV Merger Will Proceed Despite Divestment).
ITV: 020 7843 8000 www.itv.com
Recent Television Stories from NewsLine BSkyB Restructures Pricing Scheme To Boost Sky Plus Granada Dismisses Elstein’s Merger Savings Calculations ITV Axes SM:TV Live After Five Years On Air
Subscribers can access ten years of NewsLine articles by clicking the Search button to the left