Carlton And Granada Enter Advanced Merger Talks
Carlton and Granada have announced that they have entered into advanced merger talks that could lead to the creation of a single ITV.
The news ends months of speculation about the future of ITV, which has been hard hit by the ongoing advertising downturn and the departure of chief executive, Stuart Prebble, earlier this year (see Prebble Steps Down From ITV).
Under the terms of the agreement Granada will be the majority shareholder of the merged ITV, with 68% of the equity and £200 million in cash on completion of the deal. Carlton will receive 32% of the equity, which could potentially increase to 34% in 2006 depending on the achievement of the share price of the merged group. Carlton intends to pay an unchanged final dividend for the year ended 30 September 2002 of 5p per share.
Following completion of the deal, Carlton chairman, Michael Green, will become chairman of the merged group and Granada chairman, Charles Allen, will take the role of chief executive. In addition three non-executive directors from each company will join the board of the merged company.
Commenting on the announcement, Green said: “A single ITV is within sight. In a rapidly changing broadcast industry we need to combine to compete effectively. Delay is not in the interest of viewers, advertisers, stakeholders or the future of British broadcasting.”
Allen added: “A consolidated ITV will ensure that viewers and advertisers continue to benefit from choice, diversity and value in an ever more competitive broadcasting market and ensure that ITV retains its position at the heart of public service broadcasting. For viewers, it means we can continue to put our money into programmes on-screen. For advertisers, it ensures that ITV will go on attracting the mass audiences they want.”
There can be no assurance that a final agreement can be reached, but both companies believe that the proposed structure of the merger takes into account the current regulatory framework. They also expect to undertake extensive consultation with the appropriate regulatory bodies as soon as possible.
A merger between Carlton and Granada has been on the cards for some time and an announcement has been widely anticipated following the Government’s decision to abolish the regulations that prevent the single ownership of ITV (see Draft Communications Bill Relaxes Cross Media Rules).
Earlier this year Carlton chief executive, Gerry Murphy, announced that the two ITV companies were planning to merge parts of their back-office operations in an attempt to win back advertisers and cut costs (see ITV Power Brokers Team Up To Stop The Rot). The announcement fuelled speculation that a merger was imminent and drew fierce criticism from the advertising industry (see ISBA Voices Concern Over Stealth ITV Merger).
Carlton: 020 7663 6363 www.carlton.com Granada: 020 7620 1620 www.granadamedia.com
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