ITV merger plans shelved over disputes
LONDON - Granada and Carlton Communications have put on hold merger talks, following a dispute over the premium Granada would pay for its ITV partner and leadership of the merged company.
Some major shareholders are said to be keen for Carlton chief executive Gerry Murphy to run a combined company. This goes against proposals that were shelved in February, which excluded Murphy from a role in the new company.
Murphy's rising popularity could now mean that Carlton chairman Michael Green and Granada chief executive Steve Morrison would go in the event of a merger, with Granada chairman Charles Allen retained as chairman of the new company.
Under plans revealed earlier this year, the company was to have been run by Allen as chief executive and Green as chairman, with Morrison as chief operating officer and Murphy out of a job.
Once the leadership problem is resolved, however, there is still the issue of how much Granada will have to pay to take over Carlton. Carlton has already said it expects the premium to be a high one. All that Granada must now do is bite the bullet or walk away.
Yesterday, Granada reiterated its desire to merge with fellow ITV company Carlton as it reported profits almost halved to £43m in the first six months, hit by ITV Digital costs and a 12% decline in advertising.
Speaking at Granada's results meeting, Morrison said that he believes talks between the two will resume when the time is right. "There are lots of issues around regulation and price questions," he said.
Although broadcasting legislation preventing the companies from merger is being swept away in the communications bill, a deal would still have to be cleared by competition law. The merger could be opposed on competition grounds because it would control around 60% of the advertising market.
One solution to this, which is often talked about in the industry, is that ITV would have two separate sales houses to enable competition to stop ITV ad prices soaring.
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