Granada and Carlton Communica-tions, joint owners of Britain's largest commercial television network, said Friday that they had reopened merger talks and that the discussions were at an advanced stage.
The two companies broke off discussions in February because of regulatory issues and disagreements over valuation. Since then, British legislators have begun considering a draft bill that would eliminate many of the regulatory hurdles. The bill, which would also lift many restrictions on foreign companies wishing to own British television and radio broadcasters, is expected to become law the middle of next year.
Granada and Carlton have long sought a merger as the best way to consolidate ownership of ITV, the largest of Britain's three commercial networks, and second only to the government-subsidized BBC in terms of viewers. The network was created in 1954, when the Independent Television Authority awarded 15 regional licenses that collectively became known as ITV. A wave of consolidation left the bulk of those licenses in the hands of Granada and Carlton. The rest, about 8 percent, are in the hands of two television companiesin Scotland and Ireland.
Some analysts have said that ITV's byzantine ownership structure contributes to higher costs and the development of fewer hit programs, placing it at a disadvantage to rivals. ITV's share of Britain's television audience dropped to 23.6 percent in August, compared with 29 percent in August 1998, a bigger decline than experienced by any of the other networks, according to the Broadcasting Audience Research Board.
ITV recently suffered a public embarrassment, when its digital broadcasting service, trumpeted as an alternative to Rupert Murdoch's British Sky Broadcasting, was discontinued.
"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.
Blackley estimated that a combination of the two companies would result in ?30 million (US$46.8 million) of cost savings a year, money that could be invested in developing more hit programs like ITV's "Who Wants to Be a Millionaire."
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