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Granada mulls TV bid
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January 7, 2000: 5:53 a.m. ET
Broadcaster weighing $6.4B offer for Carlton or United News
By Staff Writer Rod Cant
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LONDON (CNNfn) - Granada Group raised the prospect of a significant shakeup in the U.K. media sector Friday when the television broadcaster asked the competition regulator for permission to buy either United News & Media or Carlton Communications.
United News and Carlton are merging in a deal that threatens to leave Granada out in the cold. However, if Granada gets the U.K. Office of Fair Trading’s green light to make a takeover offer it could break that deal apart.
The three companies are the main owners of Britain's Independent Television network. Carlton and United are each valued at around 4 billion pounds ($6.4 billion), while Granada has a market capitalization of almost 12 billion pounds.
Analysts said Granada was attempting to spoil the Carlton/United deal and force a wholesale review of regulations governing the ownership of U.K. commercial television.
"I'm not surprised at this," commented analyst Gareth Thomas at Commerzbank, "this involves Granada in the [regulatory] talks."
Thomas added that Granada's bid for either of the two TV companies stands a good chance of being blocked by the regulator, although it might still succeed in blowing apart the Carlton/United deal.
A source close to Granada denied the company was merely attempting to spoil its rivals' merger. "We're deadly serious about bidding, and we want clarification on what the regulatory rules are now," he said.
Granada revealed that it is considering an offer for either company "on appropriate terms". It will decide whether to bid once the outcome of the regulatory process is known.
Granada chairman Gerry Robinson promised one more big deal for the acquisitive firm when he presented half-year earnings in November. He indicated that, after that, the company would break itself in two, splitting its media interests from its chain of Forte hotels, motorway service stations and leisure clubs.
At present, regulations prevent any U.K. media company from taking its share of net television advertising revenue above 25 percent, and there is an additional limitation on any company having a television audience share of more than 15 percent. Granada has 11 percent already, and a combined Carlton/United would be just under the regulatory threshold.
Carlton owns the license for commercial terrestrial television in the London area, while United owns three regional TV licenses, as well as several national newspaper interests. Granada is the commercial TV operator for several other regions of the United Kingdom.
Commerzbank analyst Thomas pointed out that the rules on advertising market share are already under discussion, and may be revoked.
Carlton officials did not return phone calls Friday, but a United spokeswoman said the company "noted Granada's action," but continued to regard a merger with Carlton as the most attractive option.
Shares in the three companies rose: Granada gained 1 percent to 587 pence, Carlton rose 2 percent to 570 pence and United stock increased 1 percent to 806 pence. 
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