The £7.8 billion merger between Carlton and United News & Media, announced this morning (see Carlton And United News & Media Set For £7.8bn Merger), will create the UK’s largest commercial television broadcaster and a huge force in new media developments.
Commenting on the deal Clive Hollick, chief executive of United and CEO of the new group said: “The choice is straightforward – we can wait for the future to arrive or start to shape it today.” Michael Green, chairman of Carlton, will become chairman of the new group, which had combined pro forma sales of £4 billion in the most recent results for both companies. Operating profit before new media interests was £646 million and the new group’s operating cash flow was £655 million.
Through consolidation the merged company intends to invest more in production, strengthen ITV and begin to compete internationally. Uniting six ITV franchises, the group intends to strengthen the ITV network and boost and develop digital television and programme making. Hollick said: “Bringing free and pay television, programme making and the internet together in one company creates huge potential. It will have the management, the resources and the financial fire-power to succeed in the global media market-place.”
The united group expects to make savings under the deal, principally from television, of around £40 million. The extra money and added resources will stengthen digital terrestrial group ONdigital, owned jointly by Carlton and Granada. ONdigital will now benefit from the additional resources and backing of UNM’s media interests, making it a stronger competitor to BSkyB and the cable operators.
The company also plans to develop strong internet businesses and is to float its business-to-business high-tech internet interests on Nasdaq during 2000. “We plan to invest aggressively in our online business to exploit the huge potential of the new media revolution,” said Hollick. The combined group plans to expand ISP and UK content portal, Line One, develop Carlton.com into a portal and develop additional online businesses in classified advertising markets based on United’s Exchange & Mart and Dalton’s Weekly.
As part of the deal the two groups will dispose of some of their businesses. These include Carlton’s US film and video group Technicolour, UAP inc, VCG, and some non-core assets of Miller Freeman and Carlton’s Products division.
Commenting on the merger Michael Green said: “Bringing our businesses together will strengthen ITV, contribute to the success of digital terrestrial television and boost Britain’s television production base. The logic of the merger is compelling.”
Carlton Communications: 0171 663 6363 United News & Media: 0171 921 5000
