LONDON (Brand Republic) – Granada Media has snapped up United News & Media’s ITV franchises as part of a deal worth £1.75bn.
The move comes just a week after a proposed £6.5bn merger between United and Carlton Communications fell through after Department of Trade and Industry secretary Stephen Byers said the merged company had to sell its south east-based Meridian franchise.
Granada’s purchase -- £1.2bn in new shares and £500m cash -- of Meridian, Anglia and HTV will save the company £30m within two years, according to Granada chairman, Charles Allen. He said the deal would drive the development of ITV and its ONdigital digital service, which it owns jointly with Carlton Communications.
“It increases our national footprint, strengthens our offer to advertisers and allows us to play a leading role in ITV,” he added.
But regulatory restrictions, which say no one company can control more than 15% of the total television audience, may force Allen to sell one of the ITV franchises. The purchase gives Granada has a 20% audience share.
It is thought that Lord Hollick, United’s chief executive, was holding out for a bid of £2bn, but was not keen to be at the centre of a hostile bid.
Meanwhile Carlton, which is trying to sell its Technicolor videotape-processing business, has been thwarted by lack of interest. Some analysts said the division could fetch £1.7bn, but bids have fallen far short, and could mean Carlton is forced to sell it for as low as £1bn.
Carlton said a sale would definitely go ahead, even though main players such as Germany’s Bertelsmann and Time Warner are both thought to have bowed out. Other bidders are said to include Japanese bank and new Dome owner, Nomura, and US venture capital company Hicks, Muse, Tate & Furst.
This article was first published on brandrepublic.com