Future Of ITV Laid Out As Granada Seals Deal
Granada Media’s chairman Charles Allen set out plans for the future of the ITV network today as he announced details of his group’s triumph as main controller of the network. After nine months of wrangling between the three main players finally culminated in Granada’s acquisition of the TV assets of United (see Granada Takes Control Of ITV), Allen said he hoped to work in partnership with Carlton, the third player in the consolidation battle.
Granada confirmed it is no longer interested in bidding for Carlton and hopes to unite with its former rival in areas such as online, infrastructure and transmission in order to streamline ITV expenditure. Allen said he was looking forward to a move away from a “federation” within ITV and towards a partnership.
The move from three to two big players will allow greater investments to be made, particularly in relation to broadband, online and digital strategies. The future of itv.co.uk, in particular, which has been all but neglected as individual franchise owners worked on their own online strategies, will now be given greater investment, making it a strong competitor to bbc.co.uk.
ONdigital, the joint venture between Carlton and United, will be aligned more closely with ITV. Granada will become a leading shareholder in ITV2 and cross-promotion opportunities and the joint-buying of sports and film rights will allow ITV to increase its multi-channel provision. A family of ITV channels is expected to be available on Sky’s digital platform next year.
The combined group’s advertising revenues will be worth £1bn and a one-stop shop for southern-based ITV advertisers will be created. TSMS, United’s sales house and Granada Media Sales will merge, creating a uniform southern proposition to advertisers. Charles Allen was positive that fiercer competition would result from today’s news. ISBA today welcomed the swift resolution to ITV consolidation, despite its earlier reservations that advertiser confidence in the network had been destroyed (see ISBA Demands Urgent Meeting With ITV As Fate Of News At Ten Imminent).
One of the first markets to benefit from the merger will be the broadband educational arena. Granada will merge its online educational assets (see Granada Strengthens Its E-Learning Business) with Anglia Multimedia to become a market leader in this sector.
Meanwhile Granada must divest of some of the combined group’s assets in order to remain within broadcasting regulation limits. Carlton is the most likely bidder for the HTV licence; Granada said it will sell off the majority of the franchise for Wales in order to remain within the 15% upper limit on national television audience.
Without HTV Granada Media’s combined interests are still slightly over the limit: Granada currently controls 10.4% of the national audience; with United’s Meridian and Anglia franchises it will reach 14.6%, but it stake in 0.5% stake in Scottish broadcaster Border will push it over the limit. Granada will also be obliged to sell part of its 25% stake in GMTV in order to comply with broadcasting rules.
Granada will become the largest ITV company in the UK and it’s current northern bias, with its key franchises of Granada, Tyne Tees and Yorkshire, will be balanced out by the acquisition of United’s southern-based ITV companies – Meridian and Anglia – to add to its LWT franchise.
Granada said it was eager to take the new combined company into the European arena in the future and with the communications reform bill on the horizon, Charles Allen said today that he will continue to lobby for a single ITV.
The deal is worth £175bn: £1.25bn will be paid through the the issue of 213.7m shares to United shareholders, giving them 12% control of the company; the rest will be paid in cash. Cost savings in the first year are expected to be £30m, to be achieved by consolidation of sales houses, broadcasting and production efficiencies and rationalisation of ITV operations. The deal is unconditional following shareholder approval.
Granada Media: 020 7620 1620 United News & Media: 020 7921 5000 Carlton Communications: 020 7663 6363