Granada Dismisses Elstein’s Merger Savings Calculations
Granada has attacked suggestions by former Channel Five chief executive, David Elstein, that its proposed merger with Carlton could produce more than £100 million of cost savings for the combined ITV company.
Elstein, who is reportedly planning to parachute in an alternative management team to run the merged broadcaster, claims that the cost savings generated by the deal would be double the figure calculated by Carlton and Granada.
However, according to today’s Times newspaper, Granada chairman, Charles Allen, said: “We have taken our shareholders through our plan in detail and they are very supportive. Frankly, now they just want us to get on and do it.”
It is widely expected that the proposed £4 billion merger will be cleared by the Secretary Of State For Trade And Industry, Patricia Hewitt, next month. However, a number of conditions could be imposed to protect competition in the market for airtime sales, including the divestment of Carlton and Granada’s sales houses.
The two ITV partners claim the merger will enable them to save £55 million a year if they can keep their sales houses and £35 million if they are force to sell them off. Elstein insists that greater savings could be achieved if Granada shifted £100 million a year of in-house production to the independent sector.
However, Granada dismissed the suggestion and said it already produced the most cost effective programming for ITV in terms of advertising impacts. It also accused Elstein of employing double counting and of not comparing like for like.
Last weekend, senior executives at the annual Media Guardian Edinburgh Television Festival argued that the proposed £4 billion merger of the UK’s largest commercial broadcasters will go ahead even if the Government forces them to sell off their airtime sales houses (see ITV Merger Will Proceed Despite Divestment).
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