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U.K. media merger in doubt
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April 3, 2000: 8:04 a.m. ET
Regulator: Carlton-United News deal would break media ownership rules
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LONDON (CNNfn) - Britain's television watchdog ruled Monday that the impending $12.6 billion merger of broadcasters Carlton and United News & Media would breach existing laws on media ownership, but held out some hope for the deal by indicating the rules could be changed.
The Independent Television Commission, regulator of commercial television in Britain, said in a statement the Carlton-United merger would not "fit within the terms of current policy and legislation." But the ITC added that modified legislation could allow the merger to proceed.
 A key issue is the proposed company's share of total television advertising on Britain's independent television channel. The current rules have established a 25 percent ceiling, but the merger would require that limit to be raised to at least 35 percent. The agency reported "it is not easy to see how a convincing case could be made for increasing the present maximum percentage from 25 percent to as much as 40 percent."
The merger plan was referred to the Competition Commission, Britain's antitrust authority, on Feb. 8, and the commission is seeking comment from interested bodies such as the ITC. Waiting in the wings is Granada, Britain's largest independent television broadcaster. It wants to torpedo the Carlton-United tie by launching a bid of its own for either of the companies.
Analysts said Monday the nature of the ITC's statement could benefit Granada, if it holds up the Carlton-United deal until new legislation is passed. A Granada tie with either company would definitely breach current media ownership rules.
Analyst Gareth Thomas at Commerzbank said the ITC's statement lacked convincing reasons to block the deal, given that the companies could dispose of holdings in other TV companies to get below the threshold on advertising share. "They (the ITC) don't seem to want the merger to go ahead," he commented, "although they're struggling to find reasons."
Stock in all three companies involved fell Monday, with United (UNWS) sliding almost 3 percent to 801 pence, Carlton (CCM) dipping 2 percent to 774 pence, and Granada (GAA) easing 1.3 percent to 664 pence. 
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