Carlton/Granada Move Closer To £2.6bn Single ITV Company
The creation of a single ITV company took another step forward this morning, as its proponents, Carlton and Granada, announced further details of an agreed merger plan (see Carlton And Granada Enter Advanced Merger Talks).
Cost savings resulting from the merger are expected to be around £55 million, higher than most analysts’ expectations. The merged group will achieve savings of £35 million per year, following a one-off cost of around £40 million in the first full year after merger. A further £20 million of savings is expected on completion of a full merger of operations, at an estimated one off cost of around £15 million, the groups said.
Based on yesterday’s closing prices, the united company would have a market capitalisation of £2.6 billion; Granada will control 68% of the group, with Carlton shareholders taking the remaining 32%.
Programming budgets are predicted to rise by a substantial £70 million, which is good news for the Network’s advertisers, Carlton and Granada argue.
Ad sales concerns At a City briefing this morning, Granada chief executive Charles Allen – who is set to become chief executive of the merged entity – acknowledged that the issue of airtime sales is the biggest regulatory stumbling block in the proposed deal. This was also acknowledged by a media industry panel at MediaTel Group’s Media Question Time event on Monday evening.
Allen said that ITV’s advertisers would be very concerned if the current two separate sales houses were to be brought under one roof. In any case, the Competition Commission is expected to force the company to sell one of the sales operations, maybe at a minimum requirement (see ITV Merger Must Clear Regulatory Hurdles). More broadly, the whole deal itself will also need to be cleared by the Independent Television Commission before it may go ahead.
