Granada And Carlton Reveal New Savings Target

The two companies previously indicated that the tie-up would bring £55 million of annualised cost savings (see Carlton/Granada Move Closer To £2.6bn Single ITV Company). However, the merger planning has allowed costs to be cut by £43 million since the deal was announced and Granada has now identified a further £57 million that could be saved.

“Our investment strategy in ITV’s schedule is working, cost savings are ahead of plan and we are generating strong cash flows,” said Granada chairman Charles Allen. He had previously dismissed suggestions by media aficionado David Elstein that £100 million could be extracted through the creation of a single ITV (see Granada Dismisses Elstein’s Merger Savings Calculations).

Healthy results Granada has reported pre-tax profits of £143 million for the year ending 30 September, up 14% on the previous year, while revenues rose marginally to £1.41 billion. Carlton also performed well as demonstrated by profits before tax of £60 million, an increase of 68%. Group turnover was unchanged at £1.01 billion.

Carlton admitted that its share of total ITV net advertising revenue had fallen by 1.8% with the growing popularity of multi-channel television and the weak economic climate seen as contributory factors.

However, the broadcaster expects its share to grow by 1% in the current quarter on the back of a stronger ITV schedule and improving advertising demand. There are also high hopes for the merged entity in the near future.

“ITV plc will bring together a broadcast business with national reach, a content business of international scale and a clear strategy for maximising revenues in the multi-channel television world,” said Carlton chairman Michael Green.

The so-called ‘Board-in-waiting’ at ITV (see ITV Unveils New Board) is committed to growing television’s share of the total display advertisement market and satisfying the demands of viewers and advertisers alike. Allen is to stay on as chief executive but ITV is still seeking a chairman after shareholders opposed Green’s appointment (see Green Relinquishes Role As ITV Chairman Designate).

The position should be filled in early-2004 while the merger is expected to be completed on 2 February.

By 1pm today, shares in Carlton were up 15p at 237p while Granada’s stock had risen 7.5p to 126.25p.