Merger Discussions Resume with British TV Giants

Joint owners of Britain's largest commercial television networks announced that they have resumed merger talks, and that the parties' discussions were already at an `advanced stage.' Granada Media PLC and Carlton Communications, PLC, had previously broken off merger discussions last February due to regulatory problems and disagreements over asset valuation. Resumed talks are likely due to a proposed draft bill in the British legislature that would eliminate existing regulatory hurdles, including ownership by foreign companies of British television and radio broadcasters. The bill is expected to become law sometime in 2003. Granada and Carlton have wanted to consolidate their ownership of ITV, Britain's three largest commercial television networks for some time. ITV has long needed to be restructured, according to financial analysts recently: "We regard ITV as so dysfunctional that we regard a merger of Carlton and Granada as operationally excellent," Neil Blackley of Merrill Lynch wrote in a research note. Also at issue is whether the combined sales forces of Granada and Carlton would unfairly control advertising revenue and reduce competition of advertising rates. A Carlton representative indicated that the companies were looking at ways to keep separate the advertising sales forces of both companies.