In what could be mistaken as the romantic subplot of some corporate soap opera, the marriage of U.K. television powerhouses Carlton Communications and Granada is back on again. In mid-October, the two London-based companies and major shareholders in commercial network ITV agreed to a plan that will see Granada pay £2.6 billion (US$4 billion) to take over Carlton. Granada’s Charles Allen will be the new company’s CEO; Carlton’s Michael Green will carry over his chairmanship.
If the merger is successful – it must receive regulatory and investor approval before it is complete – the new company will use its greater size to fight a ratings war, mainly versus BBC, a pubcaster, and BSkyB, a satcaster, at the same time that the U.K. television industry is opened to foreign (read American) ownership.
The two companies currently hold the majority of 15 regional ITV television licenses in the country, including the two for London. Granada disclosed that it expects to shave at least £35 million ($54 million) in yearly expenses as a result of the move.
But, exactly how this merger will affect the providers of factual programming in the U.K. is hard to say, explains Carlton’s director of corporate affairs, John Rudofsky. ‘It is really too early [to tell],’ he says of the deal, adding, ‘Those [business] practicalities are likely to come along much later.’
Rudofsky adds that the merger, which will receive a close examination by the Office of Fair Trading, will not wrap until mid to late 2003 at the earliest. A strategy to satisfy competition worries includes the possible spin-off of an advertising sales unit.
‘It is a pre-condition of the merger that the competition issues are cleared first,’ he says. The overriding goal is ‘creating a consolidated ITV commercial television channel and making a much stronger and more effective channel to compete with all the other channels that have grown up,’ Rudofsky notes.